Bank Buying Rate (BBR) or Bank Selling Rate (BSR) – Economics Grade 12 Study Guides and Notes

Bank Buying Rate (BBR) or Bank Selling Rate (BSR) – Economics Grade 12 Study Guides and Notes. Foreign exchange can be confusing. To help you make sense of it all, here are some common terms to do with currency:

Sell rate –This is the rate at which we sell foreign currency in exchange for local currency. For example, if you were heading to Europe, you would exchange Australian dollars for euros at the sell rate.

Buy rate – This is the rate at which we buy foreign currency back from you into your local currency. For example, if you were returning from America, we would exchange your US dollars back into Australian dollars at the buy rate.
Holiday money rate or tourist rate – This is another term for a sell rate.

Bank Buying Rate (BBR) or Bank Selling Rate (BSR) – Economics Grade 12 Study Guides and Notes

BBR or BSR?

BBR: Bank Buying Rate

BSR: Bank Selling Rate

ACTIVITY 1:
Study the picture and the exchange rate table below and answer the questions that follow

GRATUITIES (TIPPING) An international visitor left a tip for the waitron on the table in a restaurant in South Africa
COUNTRY	CURRENCY CODE	BBR	BSR
United Kingdom	GBP	16.00	16.06
European countries	EUR	13,60	13.70

3.1.1 Identify the currency that was left on the table for the waitron  (1)
3.1.2

1. Add the total value of the foreign currency notes and coins loft on the table. (1)
2. Calculate how much the waitron could expect in rand when the owner of the restaurant exchanges the currency on behalf of the waitron.(3)

3.2 A British tourist left 27 British pounds on the table for the waitron.
3.2.1 Calculate the amount the waitran received in rand. Show ALL calculations and round off your answer to TWO decimal places. (3)
3.2.2

1. Compare the two scenarias above in terms of the value of the tips the waitron has received.(2)
2. Explain how the gratuities (tips) received by the waitron can add to the multiplier effect in the nearby community. (2) [12]

QUESTION 3
MEMO
3.1
3.1.1 Euro

• EUR
• £

3.1.2

1. 30 Euros
2. 30 (V) (13.604) = ZAR 408.00

3.2
3.2.1 27 (x) (16.00) = ZAR 432.00
3.2.2

1. He received more value in rand from the British tourist than the FX European tourist.
   • The amount he received in tips in euro was more than the amount in tips he received in British pounds.
2. The gratuities received by the waitron set the multiplier effect in motion and gives the waitron more spending power in the local community, benefitting many business and households
   Note: Accept examples related to the application of the multiplier effect

ACTIVITY 2:
Study the information and the forex table below and answer the questions that follow.

3.1 Calculate the amount in pounds that each student received when they exchanged R610,00 at the foreign exchange bureau at the OR Tambo International Airport.
NOTE: Round off your answer to TWO decimal places.
Show ALL the steps of your calculation.
3.2 When they returned to South Africa, one of the choir members exchanged £26,35 at a foreign exchange bureau at the OR Tambo International Airport
Calculate the amount in rand he received
NOTE: Round off your answer to TWO decimal places.
Show ALL steps of your calculation.
3.3 List SIX factors that may have an impact on exchange rate fluctuations in South Africa

MEMO
3.1
R610 (+) 17,18V = £›35,51

• £35,51

3.2 GBP26,35 (x) 16,09V = R 423,97

• R423,97

3.3

• Political unrest/ instability
• Natural disasters drought/water crisis
• Negative Credit Ratings/ junk status
• Corruption in government
• Discovery of new/large amounts of mineral resources
• Lack of investor confidence
  • Hosting of successful global events
  • Impact of major currencies (positive and negative)
  • Interest rates
  • Acts of terrorism
  • Reshuffling of cabinet ministers
  • Economic recession
  • High crime rates
  • Positive / negative image of the country in media reporting

ACTIVITY 3:
Study the information and the forex table below and answer the questions that follow

3.1.1

1. Calculate the amount in USD that Mrs Biggs received when she exchanged the R600,00.
   NOTE: Round off your answer to TWO decimal places
   Show ALL the steps of your calculation
2. Calculate the amount in rand Mrs Biggs received when she exchanged the US$219.99 in South Africa.
   NOTE: Round off your answer to TWO decimal places.
   Show ALL the steps of your calculation

Refer to the extract below and answer the questions that follow.

3.2.1 Name the TWO foreign currencies referred to in the extract above. (2)
3.2.2 Discuss, in a paragraph, THREE ways in which a drop in the exchange rate of the currencies mentioned in QUESTION 3.2.1 will have a positive impact on South Africans visiting Europe. (6) [16]

MEMO
3.1.1

1. R600,00 (+) 13,577 = USD44,22
   OR
   USD44,22
   • $44,22
     Note: Do not penalise candidates if the currency code/symbol is omitted, as it is given in the question.
2. USD219,99 (V) 13,257 = ZAR2 914,87
   OR
   ZAR2 914,87
   • R2 914,87
     Note: Do not penalise candidates if the currency code/symbol is omitted, as it is given in the question

3.2.1 Euro 1€
British / Pound

• Great British Pound
• Pound Sterling
  Note: Do not accept “Pound”.

3.2.2 The South Africans will receive more value for money.
It will give the South Africans greater buying/spending power.
They can afford to stay longer/repeat visits at the destination and visit more attractions/activities.

• Europe can become a value for money destination.

ACTIVITY 4:
Study the cartoon below and answer the questions that follow
3.1.1 Explain what the artist is addressing with regard to the value of the rand in the cartoon above. (2)
3.1.2 Discuss ONE way in which the value of the land has benefitted the American tourist during her visit to South Africa (2)
Study the currency rate table below and answer the questions that follow.

3.2.1 A British tourist has 2 800,00 GBP and would like to change the GBP to ZAR for a holiday in South Africa. On arrival at OR Tambo International Airport the tourist visits the foreign exchange bureau to exchange the currency.
Calculate how much the tourist will receive in rands. (4)
3.2.2 Pume, a South African, is attending a conference in the United States of America. Her company has given her R15 500,00 for any extra expenses. She goes to a foreign exchange bureau to load this money onto a preloaded foreign currency debit card
Calculate how much she will receive in US dollars on the preloaded card. (4) [12]

MEMO
3.1.1 The sudden decline in the value of the rand

• The drop in the value of the rand.
• The decline in the value of the rand resulted in a decline in the economy of South Africa.
• It advantages inbound international tourists.

3.1.2 The American tourist will receive more rands for his dollars.

• The tourist will have more spending power
• It will be a better value for money destination for the tourist.

3.2.1

• GBP2 800 x 23.577 (BBR)
  = ZAR/R65 996,00 (currency must be indicated)

3.2.2

• ZAR15 500 + 16.50 (BSR)
  = USD 939, 397 (rounded off correctly)

ACTIVITY 5:
Read the information below and answer the questions that follow.
A South African visited the United Kingdom in 2015 and in 2016. He bought fish and chips from the menu below on both trips.

Compare the value of the rand on both trips in the table below.

3.1.1 Calculate the cost of the fish and chips in ZAR:
NOTE: Show ALL calculations. Round off the answer to TWO decimal places.

1. in 2015  (2)
2. in 2016  (2)

3.1.2 State the year in which the tourist received the best value for his rand. (2)
Study the currency table below and answer the questions that follow.

NOTE: Show ALL calculations. Round off the answer to TWO decimal places.
3.2.1 Mr Small an American tourist, arrives in South Africa with USD12 600,00. Calculate how much he will receive in rand when he exchanges his foreign currency at a foreign exchange bureau.
3.2.2 Mr Small would like to exchange his remaining rands before he leaves South Africa. He goes to a foreign exchange bureau to exchange R2 750 for US dollar. Calculate the amount that he will receive in US dollar.

MEMO
3.1.1

1. 2015: £6,50 (x) 22,55 = R (ZAR) 146,58 (2)
   OR
   R (ZAR) 146,58
   NOTE: Do not penalise candidates if the currency code is omitted because the code appears in the question
2. 2016. £6,50 (X) 24.69 = R (ZAR) 160,49 (2)
   OR
   R (ZAR) 160.49
   NOTE: Do not penalise candidates if the currency code is omitted because the code appears in the question.

3.1.2 2015 (2)
3.2.1 USD12 600 (X) 10,207 =R (ZAR) 128 52V
OR
R (ZAR) 128 520
NOTE: Do not penalise candidates if the currency code is omitted because the code appears in the question
3.2.2 R2 750 (+) 10,907 = USD (US$) 252,2977
OR
USD (US$) 252,297
NOTE: Do not penalise candidates if the currency code is omitted because the code appears in the question

ACTIVITY 6:
Study the exchange rate table below and answer the questions that follow.

3.3.1 A Bloodhound team member has £1 300,00. Calculate the amount in rands that he will get for his £1 300,00 (4)
3.3.2 A British tourist pays R550,00 for a Bloodhound T-shirt. Calculate the amount in pounds the tourist will pay for the Bloodhound T-shirt. (4)
3.3.3 Discuss the buying power of the British team in South Africa, taking into account the exchange rate. (4)

MEMO
3.3.1

• £1 300,00 x 15,66  = R20 358,00
  OR
  R20 358,00

3.3.2

• R550,00 ÷ 16,39  = £33,567
  OR
  £33,56

3.3.3 The British tourists will get more value for their money.
The Pound is strong in comparison to the rand.

• More spending/buying power.

ACTIVITY 7:
Study the table below and answer the questions that follow.
Round off your answer to TWO decimal places.

3.1 Calculate the amount in rand that a South African will pay for ONE person for the above tour.(3)
3.2 A South African tourist has R250,00 in cash to pay for a handbag. Calculate the amount of PEN the tourist will pay for the handbag. (3)
3.3 Explain the difference between the buying power of a South African tourist in Peru and his/her buying power in the United Kingdom. (4) [10]

MEMO
3.1 (Using the BBR)

• £1560 (X) 15,66 = R24 429,60
  OR
• R24 429,604
  Note: No marks are awarded if the wrong currency code or symbol was used.
  Award the mark if no currency code or symbol was used.

ALTERNATIVE ANSWER
(Using the BSR)

• £1560 (X) 16,39 = R25 568,40
  OR
  R25 568,407
  Note: No marks are awarded if the wrong currency code or symbol was used.
  Award the mark if no currency code or symbol was used.

3.2

• R250 (÷) 3,55 = PEN70,42
  OR
• PEN70,42 V
  Note: No marks are awarded if the wrong currency code or syrnbol was used.
  Award the mark if no currency code or symbol was used.

3.2 ALTERNATIVE ANSWER

• R250 (÷) 3,90 = PEN64,10
  OR
• PEN64,10
  Note: No marks are awarded if the wrong currency code or symbol was used.
  Award the mark if no currency code or symbol was used.

3.3 The PEN is not as strong in value when compared to the strong GBP. A South African tourist will get more value for his money in Peru and therefore have more to spend in Peru when compared to the UK and therefore have less buying power in the UK.

• The South African will get more PEN than GBP for his/her rand; therefore he/she will be able to spend more in Peru.
• It is cheaper to visit Peru which is a better value-for-money destination.

ACTIVITY 8:
3.1 Study the exchange rate table and bank notes below and answer the questions that follow.

3.1.1 Name the currency represented on the two bank notes in the photograph above. (2)
3.1.2 A South African returns from the country where the currency mentioned in QUESTION 3.1.1 is used. Add the value of the two bank notes together and then calculate the rand value when the South African exchanges his unused foreign currency at the bank. Show ALL calculations and round off your answer to TWO decimal places. (3)
3.1.3 A South African exchanges R7 000 before his departure to New York. Calculate the amount he would receive in US dollars. Show ALL calculations and round off your answer to TWO decimal places. (3)
3.2 Study the South African rand to US dollar exchange rate graph below and answer the questions that follow.

3.2.1 State the value of the South African rand in relation to the US dollar on 8 October 2013 (2)
3.2.2 The line graph shows daily changes in the rate of exchange Give the term used for these changes in the exchange rate. (2)
3.2.3 Determine the date and the value of the exchange rate when:

1. The rand was at its weakest  (2)
2. The rand was at its strongest (2)

3.2.4 Explain TWO ways in which the travel plans and budget of an Inbound international tourist who visits South Africa will be affected by a weakening rand. (4) [20]

MEMO
3.1
3.1.1 British Pounds

• Pound Sterling .
• GBP
• 15 Founds .
• 15 GBP

3.1.2 GBP 15 X 15.32 (BBR) =ZAR 229.807 (two decimal places to indicate cents)
3.1.3 ZAR 7 000 = 9.89 (BSR) =USD 707.79(rounded up correctly)
3.2
3.2.1 R10
3.2.2 fuctuation
3.2.3

1. 29 September
   • 1 October
     More than 10.10
     (Any rate between 10.10 and 10.15, including the first and last values in this range is acceptable)
   • 23 October
     less than 9.75
     (Any rate between 9.70 and 9.75, including the first and last values in this range is acceptable)

3.2.4 Tourists might extend their length of stay ✓
Tourists can retain their original budget and have more money at their disposal.

• Tourists will be able to reduce their original budget making their trip less expensive.
• Tourists will use this opportunity to purchase more foreign currency needed for the intended joumey.