High School

If the selling rate of 1 British Pound Sterling (£) is Rs 158 and the buying rate is Rs 157, Mr. Gorkhe purchased Pound Sterling with Rs 65,096 and sold it the next day.

(a) Which rate does the bank use to exchange Rs 65,096 into pound sterling? Exchange Rs 65,096 into pound sterling.
(b) Calculate the new exchange rate for the pound after a 10% devaluation of the Nepali currency.
(c) How much Nepali currency Mr. Gorkhe receives if he re-exchanges pounds after this devaluation?
(d) Calculate Mr. Gorkhe's profit percentage from these currency exchanges.

Answer :

To solve this problem, let's go through each part step by step:

(a) Exchange Rs 65,096 into pound sterling:

  • To exchange Nepali rupees (Rs) into British Pound Sterling (£), the bank uses the 'buying rate'. The buying rate is what the bank uses to buy pounds when given Nepali rupees.

  • The given buying rate is Rs 157 to £1.

  • To find out how many pounds Mr. Gorkhe can purchase with Rs 65,096, we use the formula:

    [tex]\text{Pounds} = \frac{\text{Total Rupees}}{\text{Buying Rate per Pound}}[/tex]

    [tex]\text{Pounds} = \frac{65,096}{157} \approx 414.62[/tex]

    Thus, Mr. Gorkhe can purchase approximately £414.62.

(b) Calculate the new exchange rate after a 10% devaluation of the Nepali currency:

  • If the Nepali currency is devalued by 10%, the rupee's value decreases, which means more rupees are needed to purchase one pound.

  • The new rates will be:

    [tex]\text{New Buying Rate} = 157 + (157 \times 0.10) = 157 + 15.7 = 172.7[/tex]

    [tex]\text{New Selling Rate} = 158 + (158 \times 0.10) = 158 + 15.8 = 173.8[/tex]

    Therefore, the new buying rate is Rs 172.7 and the selling rate is Rs 173.8.

(c) Re-exchange pounds back into Nepali currency after devaluation:

  • After devaluation, we use the 'selling rate' to re-exchange pounds back into Nepali rupees.

  • Using the new selling rate of Rs 173.8 per pound,

    [tex]\text{Rupees Received} = \text{Pounds} \times \text{New Selling Rate}[/tex]

    [tex]\text{Rupees Received} = 414.62 \times 173.8 \approx 72,061.36[/tex]

    Thus, Mr. Gorkhe receives approximately Rs 72,061.36.

(d) Calculate Mr. Gorkhe's profit percentage:

  • First, calculate the profit by subtracting the initial amount spent from the rupees received:

    [tex]\text{Profit} = 72,061.36 - 65,096 = 6,965.36[/tex]

  • Next, calculate the profit percentage using:

    [tex]\text{Profit Percentage} = \left( \frac{\text{Profit}}{\text{Initial Amount}} \right) \times 100[/tex]

    [tex]\text{Profit Percentage} = \left( \frac{6,965.36}{65,096} \right) \times 100 \approx 10.7\%[/tex]

    Therefore, Mr. Gorkhe's profit percentage from these currency exchanges is approximately 10.7%.