How to Calculate Exchange Rates

This article explains how to convert and calculate your dollars into other currency.

Instructions

Difficulty: Moderately Easy

Things You’ll Need:

• Pencil
• Calculator
• Exchange Rates of other currency.

1. Examples of other nation currency!! First, let me explain what an Exchange Rate is. An exchange rate is the rate at which the currency of one nation can be exchanged for currency of another nation(Economics; McConnell and Brue 92).
2. Now let me give you some foreign exchange rates.
3. According to X-Rates.com this is what 1 American Dollar equals in other national currencies.
   Australian Dollar 1.14168 AUD
   Brazilian Real 1.793 BRL
   British Pound 0.512059 GBP
   Canadian Dollar 1.0294 CAD
   Chinese Yuan 7.2424 CNY
   Danish Krone 5.0973 DKK
   Euro 0.684182 EUR
   Hong Kong Dollar 7.8073 HKD
   Indian Rupee 39.2 INR
   Japanese Yen 106.82 JPY
   Malaysian Ringgit 3.2755 MYR
   Mexican Peso 10.9375 MXN
   New Zealand Dollar 1.31996 NZD
   Norwegian Kroner 5.4701 NOK
   Singapore Dollar 1.4381 SGD
   South African Rand 7.0752 ZAR
   South Korean Won 945.9 KRW
   Sri Lanka Rupee 108 LKR
   Swedish Krona 6.4475 SEK
   Swiss Franc 1.101 CHF
   Taiwan Dollar 32.31 TWD
   Thai Baht 30.8 THB
   Venezuelan Bolivar 2.1446 VEB
   
   using values from Friday, January 18, 2008
4. This is a picture of 1000 Japanese Yen. I actually have one of these plus some change. Let's take the Japanese Yen for example. 1 American Dollar equals 106.82 Yen. That means that converted to Yen, $1.00 can buy 106.82Y worth of Japanese goods.
5. Now, let's learn to calculate. First, we know that 106.82Y equals $1.00, but what would be the U.S. dollar-Yen exchange rate?? 106.82 is not right! You divide 1.00 into 106.82 which equals 0.009 cents per 1 Yen. That is not even 1 penny's worth per Yen in Japan.
6. Okay, now that I have confused some of you. Let's take a TV bought in Japan. We have bought a Sanyo TV which costs $20,000Y in Japan. How much is that in American dollars you ask?
7. Let's calculate. Remember that 0.009 cents equals 1 Yen. So, we just take 0.009 multiplied by 20,000 which equals $180.00 U.S. dollars. That wasn't so bad now was it?? This conversion goes for ALL exchange rates whether it is Euros, Pounds, Francs, etc.

Tips & Warnings

• REMEMBER: Exchange Rates change everyday; sometimes on the hour.
• Keep an eye on Bloomberg, X-Rates(online), and any other Money channel to see what your currency equals to the American dollar.
• When buying something overseas, remember to keep an eye on the exchange rates for that day.
• If you buy something today with the rates up always remember it may be cheaper tomorrow!!