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Sunday, September 18, 2016

"Being Ready for ZIM Exchange Rate at the Bank" - TNT Mac929

TNT

Mac0929:

Being ready for Zim Exchange Rate presented by bank

We often talk about an exchange rate of 2 or 3 digits after dropping 6 zeros. However, banks will not likely use this terminology. This note is to help you be prepared to know what all means the same thing.

But first "the simple strategy" is to know what 10 trillion or 100 trillion Zim translates to and just ask "so with this exchange rate how much per 10/100 trillion?"

Let's do an example: Say you are expecting an exchange rate of $0.10 after dropping 6 zeros. You should then be expecting $10 million for every 100 trillion Zim note you have. You get to the bank and they say the exchange rate 0.2e-5 or 0.000002 Is that a good thing or bad?

What "e-5" means is essentially the same thing as dropping 5 zeros.

All the zeros after the decimal before the first real number is also equivalent to how many zeros you are dropping, again 5, making the two ways of presenting it equal.

So is 0.2 after dropping 5 zeros better or worse than $0.10 after dropping six? To make equal you add one more decimal place to the 0.2 for the sixth zero and it is $0.20 after dropping six zeros. YEAH, it is twice what you expected. However that is a whole lot of math to figure out.

Let's say instead you immediately ask "what does that exchange rate make 100 trillion Zim worth?" They will answer $20 million. That is double the $10 million you expected. And you got to the same answer a whole lot faster.

So remember these simple steps:

1) Know how much 100 trillion should be worth

2) When you hear the exchange rate, ask "how much does that make 100 trillion worth

3) Negotiate from there Hope this helps!

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