Topic: Settlement Calculations

In each of the five scenarios below, you are required to state clearly the following: A. The type of rate quotation and its applicable rules on the market. (1 mark) B. The position of your bank in the transaction. (1 mark) C. The applicable rate for your calculation. (1 mark) D. The settlement amount for your customer’s account. (1 mark)

1. Cement Solutions Ltd (CSL) is a new manufacturing company taking advantage of the housing deficit of the country to produce quality and affordable cement for the real estate industry. They have imported clinker from a Norwegian company worth NOK 750, 000, 00. Payment is due tomorrow and the Accountant called the sales desk at your bank’s Treasury for the rate to know how much will be debited to their Ghana Cecil account at your branch at Ridge, Accra. Your bank’s rate is as follows: Spot NOK/GHS 1.2210 1.2235
2. Asesewa Quarries Ltd. (AQL) taking advantage of the AICFTA, shipped limestone to a mining company in Angola costing Angolan Kwanza 3, 000, 000.00. AQL did not cover forward and want to know how much the company will receive in Ghana Cedis as payment is due today. AQL keeps its business account with your bank’s branch at Somanya. See rates below: Spot GHS/AOA 39.6805 39.9815
3. Dampare & Sons are dealers in quality rice on the Ghanaian market and have been importing mainly from the Asian millers which are always quoted in US dollars. The uncertainty of the depreciating local currency is affecting their profit margins. Under the AICFTA they now get their supplies from neighbouring Nigerian millers which have improved their bottom-line. The Accountant called at your Tema Market branch to make payment for NGN 15.0 million and your quote for the day is as follows: Spot NGN/GHS 0.0285 0.0295
4. The Head of Finance of University of KwaZulu-Natal, which has been chosen among the ten universities doing Medicine in South Africa, called at your Durban branch this morning to make payment for GBP 40,750,00 to a hospital equipment supplier in London to the debit of their local currency account. The value date is today and your bank has quoted the following rate from its trading floor:

Spot GBP/ZAR 21,95010 21,9835 5. You are in charge of the trading desk for foreign exchange operations at Commerzbank Tower, Frankfurt Main. You picked up an in-coming phone call and the counterpartry, your well-known customer, requested to pay GHS 775, 000,00,00 to a beneficiary company in Adum, Kumasi for goods imported. Based on your bank’s electronic screen displaying the rates for today as shown below, calculate how much should be debited to your customer’s euro account:

Spot EUR/GHS 13,5605 13,5675

[Total marks 20]