CURRENCY CONVERSION II - MULTIPLY OR DIVIDE
By CM Lim.
WHICH OPERATOR TO USE?
Part One CURRENCY CONVERSION I - TWO WAY RATES left off with the understanding of Reciprocal Rates between two currencies, Part Two here pick up from the same scenario about Roy's holiday in Bangkok.
To recap, In Part I, Roy learned there are 2 rates at play in currency exchange which is the Reciprocal Rates.
he changed S$500 in Singapore at the rate of S$1 = 25 Baht.
S$500 x 25 Baht = 12500 baht
he changed another S$500 in Bangkok at the rate of 1 Baht = 0.04 cents.
S$500 / S$0.04 cents = 12500 baht
Take a closer examination at both the computation, it is not difficult to see that getting the right conversion boils down to the correct used of the
and is exactly what this article is covering - CONVERSION USING MULTIPLY OR DIVIDE - When to use which operator.
SIMPLE RULE - I MADE IT UP
During my employment in the financial field in early 90's, I developed my own unconventional way of using the right operator to do the conversion, no math, no science, just a hard and fast rule to stick to, in fact, I gave it a name, it's call "Same Same Divide".
I have to rely on this rule because I don't have the time to ponder if French Franc is bigger or smaller than Mark, Lira is stronger or weaker than USD, Pound, Yen and so many more..
so here's the formula
SAME SAME DIVIDE (SSD)
When the Amount and Rate are both Same currency, use Division
Amount S$500 / Rate S$0.04 cents = 12500 baht
When the Amount and Rates are in different currencies, use Multiplication
Amount S$500 X Rate 25 Baht = 12500 baht
Let's draw on an example...
You wish to have S$1500 changed to Stirling Pound, the dealer swiftly tells you the rate being 0.55.
Money changer usually assumes you know what the rate means so will just quote you the numbers unless you specifically ask what is the currency of the rate quoted. On ascertaining the currency of the rate 0.55 is Pound to S$1, we apply the SSD rule, it will be
S$1500 x £0.55 = £825 pound ( S$ and £ different currencies - Multiply )
If dealer quote 1.818 and we had ascertained it to be a Singapore dollar rate to £1, the conversion will be
S$1500 / S$1.818 = £825 pound ( Same currencies - Divide )
ONLINE RATES
This day this age, desktop currency conversion application or mobile apps are fast, convenient and up to date with online rates, only 3 pieces of information are required, namely, the 2 currencies involved and the amount to convert, the converter will do the rest of the computation and swiftly return an accurately converted amount.
Under the hood, you will be pleased to know the calculation simply involves using either the Multiply or the Divide operator.
And if you ever only have a simple calculator to work on, you know it will be just fine to get by with Reciprocal Rate and the rule of Same Same Divide.
WHICH OPERATOR TO USE?
Part One CURRENCY CONVERSION I - TWO WAY RATES left off with the understanding of Reciprocal Rates between two currencies, Part Two here pick up from the same scenario about Roy's holiday in Bangkok.
To recap, In Part I, Roy learned there are 2 rates at play in currency exchange which is the Reciprocal Rates.
he changed S$500 in Singapore at the rate of S$1 = 25 Baht.
S$500 x 25 Baht = 12500 baht
he changed another S$500 in Bangkok at the rate of 1 Baht = 0.04 cents.
S$500 / S$0.04 cents = 12500 baht
Take a closer examination at both the computation, it is not difficult to see that getting the right conversion boils down to the correct used of the
Operator X or /
SIMPLE RULE - I MADE IT UP
During my employment in the financial field in early 90's, I developed my own unconventional way of using the right operator to do the conversion, no math, no science, just a hard and fast rule to stick to, in fact, I gave it a name, it's call "Same Same Divide".
I have to rely on this rule because I don't have the time to ponder if French Franc is bigger or smaller than Mark, Lira is stronger or weaker than USD, Pound, Yen and so many more..
so here's the formula
SAME SAME DIVIDE (SSD)
When the Amount and Rate are both Same currency, use Division
Amount S$500 / Rate S$0.04 cents = 12500 baht
When the Amount and Rates are in different currencies, use Multiplication
Amount S$500 X Rate 25 Baht = 12500 baht
Let's draw on an example...
You wish to have S$1500 changed to Stirling Pound, the dealer swiftly tells you the rate being 0.55.
Money changer usually assumes you know what the rate means so will just quote you the numbers unless you specifically ask what is the currency of the rate quoted. On ascertaining the currency of the rate 0.55 is Pound to S$1, we apply the SSD rule, it will be
S$1500 x £0.55 = £825 pound ( S$ and £ different currencies - Multiply )
If dealer quote 1.818 and we had ascertained it to be a Singapore dollar rate to £1, the conversion will be
S$1500 / S$1.818 = £825 pound ( Same currencies - Divide )
ONLINE RATES
This day this age, desktop currency conversion application or mobile apps are fast, convenient and up to date with online rates, only 3 pieces of information are required, namely, the 2 currencies involved and the amount to convert, the converter will do the rest of the computation and swiftly return an accurately converted amount.
Under the hood, you will be pleased to know the calculation simply involves using either the Multiply or the Divide operator.
And if you ever only have a simple calculator to work on, you know it will be just fine to get by with Reciprocal Rate and the rule of Same Same Divide.
Thank you for visiting
CURRENCY CONVERSION II - MULTIPLY OR DIVIDE
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