Posted by forex at 5:25 AM
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1. Find the USD/INR exchange rate. There are numerous online sites that can provide this rate, for example see Reference 1. In our example, we find the rate is 1 USD buys 45 INR, as of Dec. 31, 2010. The price of the INR in terms of dollars is 1 divided by 45, or 0.0222.
2. Find the GBP/USD exchange rate. Since both of the currencies are considered majors, the rate can be found on any site featuring current exchange rates. For our example, the rate 1 GBP buys 1.54 USD, for a price of 1 divided by 1.54, or 0.6494.
3. Cross-multiply the two currency pairs. Through cancellation, we are left with the currency rate we seek. In our example, USD/INR times GBP/USD gives GBP/INR, the pair in which we are interested. Substituting numbers to get the price, we get 1/45 times 1/54, or 0.0144. Dividing this price into 1, we get the ratio of 1 GBP buys 69.5 INR.