Hello.
We can easily determine the exchange ratio by looking at how each
currency stacked up against the US dollar for March 1982. The US
Federal Reserve has this information on its web site.
I selected the date of March 1, 1982, but data is available for the
whole month of March 1982.
USD/AUD
1-Mar-82 1.0700
source: US Federal Reserve: Foreign Exchange Historical Rates
http://www.federalreserve.gov/releases/H10/hist/dat89_al.htm
USD/GBP
1-Mar-82 1.8217
source: US Federal Reserve: Foreign Exchange Historical Rates
http://www.federalreserve.gov/releases/H10/hist/dat89_uk.htm
Now, we can simply multiply to remove the dollars from the equation...
1 GBP 1.0700 USD
---------- X ------------- = 0.5873 GBP/AUD
1.8217 USD 1 AUD
0.5873 GBP/AUD may also be expressed as 1.7025 AUD/GBP
--------------
Now, you may be asking, how can I be sure that this method will give
me the actual GBP/AUD exchange rate?
Well, a simple check on today's rates at Yahoo Finance will
demonstrate that this holds true.
http://finance.yahoo.com/currency?u
Let's take today's rates for USD, AUD, and GBP
(NOTE: These rates may have changed slightly by the time you read this
because currency markets are trading around the world).
1 USD 1.3998 AUD
----------- X ------------- = 2.5793 AUD/GBP
0.5427 GBP 1 USD
A Yahoo currency quote verifies that this is 2.5793 AUD/GBP is the
current rate...
http://finance.yahoo.com/currency/convert?amt=1&from=GBP&to=AUD&submit=Convert
The exchange rates between three currencies move in sync because the
practice of "triangular arbitrage" forces the currencies into this
type of equilibrium. Currency traders can profit from small
discrepancies between three currencies, but by buying the undervalued
currency the market mechanism returns it to proper valuation. More
information if you're interested in the economics of this:
://www.google.com/search?hl=en&ie=ISO-8859-1&q=%22triangular+arbitrage%22+%22three+currencies%22&btnG=Google+Search
--------
search strategy:
historical "exchange rates", site:gov
I hope this helps. |
Request for Answer Clarification by
lindisfarne-ga
on
22 Jul 2004 20:56 PDT
Thank you very much for your fast, detailed response. I'm trying not
to sound totally uneducated, but Math wasn't my best subject at
school!
When I multiply the equation to remove the dollars... how exactly do I
do that to end up with 0.5873 gbp/aud? and then how do I express it as
the reverse aud/gbp??
Many thanks
Kim
|
Clarification of Answer by
juggler-ga
on
22 Jul 2004 21:18 PDT
Okay, here's a math refresher:
"Cancelling Units"
http://www.purplemath.com/modules/units.htm
1 GBP 1.0700 USD
---------- X ------------- =
1.8217 USD 1 AUD
Since USD appears in the numerator and the denominator, USD cancels out, so...
1.0700 GBP
---------- = 0.5873 GBP/AUD
1.8217 AUD
See Google calculator:
://www.google.com/search?hl=en&ie=ISO-8859-1&q=1.07%2F1.8217&btnG=Google+Search
0.5873 GBP/AUD may also be expressed as 1.7025 AUD/GBP
It's the reciprocal:
1.8217 AUD
---------- = 1.7025 AUD/GBP
1.0700 GBP
See Google calculator:
://www.google.com/search?hl=en&lr=&ie=ISO-8859-1&c2coff=1&q=1.8217%2F1.07&btnG=Search
I hope this helps. Let me know if it's unclear. Again, I did the
conversion for March 1, 1982, but I'll be happy to give you the
exchange rate for any other day that you want. Thanks!
|
Clarification of Answer by
juggler-ga
on
22 Jul 2004 21:28 PDT
Another way of expressing this is simply to say that if 1 British
Pound is the equivalent of 1.8217 US Dollars, and 1.07 US Dollars is
the equivalent of 1 Australian dollars, then 1 Australian Dollar is
the equivalent of 0.5873 British Pounds.
|
Request for Answer Clarification by
lindisfarne-ga
on
23 Jul 2004 08:05 PDT
I took a closer look at the information this morning and figured it out!
Many thanks for such a detailed answer.
Regards, Kim
|
Clarification of Answer by
juggler-ga
on
23 Jul 2004 10:09 PDT
Thank you for the tip and kind words.
-juggler
|
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