Exchange Rates (Leaving Cert Mathematics): Revision Notes
Exchange Rates
Understanding exchange rates is an essential skill in both business and personal finance.
When we travel abroad or trade internationally, we often need to convert money from one currency to another.
The exchange rate tells us how much one unit of a currency is worth in another currency — it acts as a conversion factor between two monetary systems.
How Exchange Rates Work
Every exchange rate links two currencies — for example, euros (€) and US dollars ($).
The exchange rate can be written as:
€1 = $1.32
This means 1 euro equals 1.32 dollars.
If the rate changes, the amount of foreign currency you receive also changes.
Exchange rates can fluctuate daily due to factors like inflation, trade, and global economic conditions.
Converting from Euros to Dollars
When converting from euros (€) to dollars ($), multiply the amount in euros by the exchange rate.
This is because each euro is worth 1.32 dollars.
Example 1: Converting Euros to Dollars
The exchange rate between the euro and dollar is €1 = $1.32.
How many dollars will you get for €500?
Step 1: Write the formula
€1 = $1.32
Step 2: Multiply the given amount by the rate
€500 × 1.32 = $660
Answer:
You will receive $660 for €500.
Converting from Dollars to Euros
When converting from dollars ($) to euros (€), divide the dollar amount by the exchange rate.
This reverses the conversion so that we find how many euros are equal to a certain number of dollars.
Example 2: Converting Dollars to Euros
Using the same rate of €1 = $1.32,
how many euros will you get for $594?
Step 1: Write the formula
€1 = $1.32
Step 2: Reverse it to find euros from dollars
$1 = €(1 ÷ 1.32)
Step 3: Multiply by the given amount
$594 ÷ 1.32 = €450
Answer:
You will receive €450 for $594.
Key Formulas
| Conversion Type | Formula | Description |
|---|---|---|
| From € to $ | Amount in € × Rate = Amount in $ | Multiply by the exchange rate |
| From $ to € | Amount in $ ÷ Rate = Amount in € | Divide by the exchange rate |
Exam Tip
- Always identify which currency is being converted to which before starting the calculation.
- If the question asks for euros, make sure your answer is in euros — not dollars.
- Be careful with the direction of the conversion:
- Multiply when converting from euros to foreign currency.
- Divide when converting from foreign currency to euros.
- Round to two decimal places unless told otherwise.