Sheet № 225 · Foundation + Higher · AQA · Edexcel · OCR
Exchange Rate Problems –
Exchange rate problems appear regularly on GCSE Maths papers and test your ability to convert between currencies using multiplication and division. These questions are set in real-world contexts such as holiday money, online purchases and international trade. At Foundation tier you will convert between two currencies using a given rate. A
§Key definitions
Question:
The exchange rate is £1 = $1.25. Convert £360 into dollars.
Answer:
£360 = $450
Q1 (Foundation):
The exchange rate is £1 = ¥155. Convert £80 to Japanese yen.
Q2 (Foundation):
The exchange rate is £1 = $1.30. How many pounds is $520?
Q3 (Higher):
Emma exchanges £400 to euros at £1 = €1.14. She spends €350. She converts the rest back at £1 = €1.10. How much does she get back in pounds?
§Formulas to memorise
Amount in foreign currency = Amount in pounds x Exchange rate
Amount in pounds = Amount in foreign currency / Exchange rate
Identify the exchange rate — given in the question and note which direction the conversion goes.
Decide whether to multiply or divide. — Going from pounds to a foreign currency — multiply. Going from a foreign currency back to pounds — divide.
Perform the calculation — carefully, keeping at least two decimal places for currency.
Round appropriately — currency answers are usually given to two decimal places (nearest penny or cent).
Check reasonableness — if you exchange £100 at a rate of 1.15, you should get more than 100 euros.
Worked example
The exchange rate is £1 = $1.25. Convert £360 into dollars.
Working:
⚠ Common mistakes
- ✗Multiplying when you should divide (or vice versa). Converting to a foreign currency usually means multiplying. Converting back to pounds means dividing. Always check which direction the rate is given.
- ✗Using the wrong rate in buy/sell problems. The bureau sells foreign currency to you at the less favourable rate for you. Read the question carefully to see which rate applies.
- ✗Rounding too early. Keep full decimal precision during intermediate steps and only round the final answer to 2 decimal places.
✦ Exam tips
- →Write down the exchange rate and label which currency is which. This avoids confusion in multi-step problems.
- →If the answer seems too large or too small, you have probably multiplied instead of divided (or the reverse). Use common sense to check.
- →On AQA and Edexcel papers, expect 3- to 5-mark currency questions that involve spending, converting back, and comparing costs.