Practicing Success
Read the case study and answer the following. The rupee rose by 3 paise to settle at 72.94 (provisional) against the US dollar on Monday, extending its gains for the fifth straight session despite heavy selling in domestic equity market. At the inter-bank Forex market, the rupee opened at 72.95 against the American currency and hit an intraday high of 72.89 and a low of 72.96 in day trade. It finally finished at 72.94, higher by 3 paise over its last close. On Friday, the rupee had settled at 72.97 against the American currency. Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies advanced 0.10 percent to 90.32. The rupee has managed to hold its fort around the 72.90 to 73 levels, but given the sell-off in equities and the likelihood of a rebound in the dollar index, we see the trend tilting slightly towards depreciation going forward. |
Intraday high of 72.89 and a low of 72.96 signifies the range of change to be : |
7 basis points 70 basis points 700 basis points 7000 basis points |
7 basis points |
The correct answer is option (1) : 7 basis points The range of change, from an intraday high pf 72.89 to a low of 72.96, is typically expressed in basis points. 1 basis point is equal to 0.01% So, the range of change is : (72.96 - 72.89) = 0.07 rupees To express this change in basis points : $\frac{0.07\, rupees × 100\, basis \, points }{1\, rupee}$= 7 basis points So, the range of change is 7 basis points. |