GCSE(F),

Foreign currency involves changing money from one currency to another using an exchange rate. The exchange rate determines how much of one currency is worth compared to another.

For example, buying £200 worth of Euros at an exchange rate of 1.40 Euros per pound will give 200 x 1.4 = 280 Euros.

The exhange rate works as a multiplier in one direction, and as a divisor in the other.

If there were 960 Euros being converted to Sterling, at the same rate of 1.4 Euros to the Pound, then the calculation is a division. Use a small table: place the conversion rate on the first line; then put the amount to be converted in the correct column:

Pounds | --> | Euros |

1 | x | 1.4 |

? | 960 |

Because the conversion is going in the opposite direction to the rate, then the calculation is 960 ÷ 1.4 = £685.71.

Note: Currencies all have a three-figure code: the pound has a code of GBP; the Euro has a code of EUR and the American dollar is USD.

1. Convert £150 (GBP) into Singapore Dollars (SGD). The exchange rate is 1 GBP = 2.06 SGD.

Answer: 309 SGD

GBP | --> | SGD |

1 | x | 2.06 |

150 | ? |

150 x 2.06 = 309.00

2. William changed £200 into Euros for his holiday. He has 45 Euros left. If the exchange rate is 1 GBP = 1.38 EUR, how much, in pounds sterling, did he spend on holiday?

Answer: £167.39

Pounds | --> | Euros |

1 | x | 1.38 |

? | 45 |

The conversion is going the other way, so the calculation is 45 ÷ 1.38 = 32.61.

He started with £200, so he spent £200 - £32.61

Our iOS app has over 1,000 questions to help you practice this and many other topics.

Available to download free on the App Store.

Available to download free on the App Store.