InvestorQ : which is the exchange rate used for converting sales
pradnya made post

which is the exchange rate used for converting sales

Answer
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Arusha Ray answered.
2 weeks ago


Normally, the average exchange rate is used to ensure that the short term fluctuations in the exchange rate are smoothed. For example, if you are looking at quarterly sales, then the average exchange rate of last 15 days is considered.

On the other hand for referring to sales of the full year, the average exchange rate for the last one month is considered and the average rates are used to calculate the rate. Normally, most companies use the RBI reference rate that is announced by the RBI each working day as the benchmark for calculating the average.

The issue gets a little more complicated if there are sales in multiple currencies like in the case of IT and pharma. In such cases, normally the cross currency rates of the RBI are used to standardize and present all the data in a single currency; normally US dollars.