Retirement of import bill for GBP 100,000.00 by TT Margin 0.20%, ignore cash discount/premium, GBP/U

Retirement of import bill for GBP 100,000.00 by TT Margin 0.20%, ignore cash discount/premium, GBP/USD 1.3965/75, USD/INR 55.16/18. Compute Rate for Customer. a. 76.5480 b. 76.6985 c. 77.1140 d. 77.2682 Ans - d Explanation : For retirement of import bill in GBP, we need to buy GBP. To buy GBP we need to give USD and to get USD, we need to buy USD against Rupee, i.e. sell Rupee. At the given rates, GBP can be bought at 1.3975 USD and USD can be bought at Rs. 55.18. The GBP/INR rate would be 77.1140. (1.3975 x 55.18), at which we can get GBP at market rates. Thus the interbank rate for the transaction can be taken as 77.1140. Add Margin 0.20% 0.1542. Rate would be 77.1140 + 0.1542 = 77.2682 for effecting import payment. (Bill Selling Rate).

 

buy low and sell more... then how come GBP can be bought at 1.3975??? while GBP/USD 1.3965/75