currency logic

OwenM

I know this is a simple maths question but if I get it wrong it could be expensive.

I have a system that stores current exchange rates. The base currency is USD so everything is stored as 1 USD = x.xxx A N Other currency.

The request from the business is to fix a subset of the rates against the EUR

e.g. 1 EUR must always equal 1.9557 BGN

We get fresh daily rates via a webservice (Third party).

So I'm multiplying the USD:EUR rate by the fixed rate (BGN) rate and storing this as the USD BGN rate

e.g. 1 USD = 0.9 EUR today means 1 USD = 0.9 * 1.9557 BGN
-- the USD:BGN rate moves with the EUR

Am I doing this right?

ILikeBananas

Well if the Euro floats relative to the US $ but is fixed versus the BGN then by that logic yes the BGN should also float relative to the US $.

In this example the Bulgarian Lev has been pegged to the Euro as part of the process of them eventually adopting the Euro currency (We had the same experience with our punt being fixed versus the Euro from 1999-2002).

So 1 Euro = 1.9557 BGN and
1 US$ = 0.9 Euro.

Therefore 1 Euro = 1/0.9 US $ = 1.1111 US$

and thus, 1.9557 BGN = 1.1111 US$
1 US$ = 1.9557 / 1.1111 = 1.7601 BGN

So, yes I think you're doing it right.

rock22

ECB shows exchange rate of 1.9558
https://www.ecb.europa.eu/stats/policy_and_exchange_rates/euro_reference_exchange_rates/html/eurofxref-graph-bgn.en.html