ABSTRACT
Exchange rate is a process in which a
currency maybe converted into another. (Such as for the purpose of traveling to
another country), or for engaging in speculation or trading in the foreign
exchange market. There are enough variety of factors which influence exchange
rates, such as interest rate inflation and the state of politics and the
economy in such country also called rate of exchange or foreign exchange rate
or currency exchange rate. We
come across different transactions involving money in our everyday life, and
every day the rate of exchange from one currency to the other appreciate and
depreciate with different factors contributing to that. Some of these factors
are economic, political or even disasters both natural and artificial.
Different countries have different currencies they use for transaction, for
example; Nigeria uses Naira and kobo, UK (England) Uses Pounds and sterling,
America uses US Dollars etc. so with many other countries. In Nigeria Bureau de
change is a body that is responsible for changing or converting one currency to
the other, this body exists in banks in different part of Nigeria. Apart from
the bank, currency conversion or exchange can also be done at local markets.
Some individuals authorized and owned by the bureau or Banks also handle this
currency conversion in the local markets. However, the body (Bureau de change)
and individuals involved in this business face the challenge of computing or
calculating the result of conversion and keeping record and track of change in
the rate of conversion. These were done manually using calculator or books which
are prone to errors. The development of computerize exchange rate computation
system will enable reduce errors in conversion and calculation, keep track of
conversion rates and reduce the mental stress of the doing the calculation
manually.
CHAPTER ONE
1.0 INTRODUCTION
Exchange rate is a process in which a currency maybe converted into
another. (Such as for the purpose of traveling to another country), or for
engaging in speculation or trading in the foreign exchange market. There are
enough variety of factors which influence exchange rates, such as interest rate
inflation and the state of politics and the economy in such country also called
rate of exchange or foreign exchange rate or currency exchange rate. An exchange rate between two currencies
is the rate at which one currency will be exchanged for another. The
amount of one currency that a person or institution defines as equivalent to
another when either buying or selling it at any particular moment.
1.1 BACKGROUND OF STUDY
We come across different
transactions involving money in our everyday life, and every day the rate of
exchange from one currency to the other appreciate and depreciate with
different factors contributing to that. Some of these factors are economic,
political or even disasters both natural and artificial. Different countries
have different currencies they use for transaction, for example; Nigeria uses
Naira and kobo, UK (England) Uses Pounds and sterling, America uses US Dollars
etc. so with many other countries.
In Nigeria Bureau de change is a
body that is responsible for changing or converting one currency to the other,
this body exists in banks in different part of Nigeria. Apart from the bank,
currency conversion or exchange can also be done at local markets. Some individuals
authorized and owned by the bureau or Banks also handle this currency
conversion in the local markets.
However, the body (Bureau de
change) and individuals involved in this business face the challenge of
computing or calculating the result of conversion and keeping record and track
of change in the rate of conversion. These were done manually using calculator
or books which are prone to errors. The development of computerize exchange
rate computation system will enable reduce errors in conversion and
calculation, keep track of conversion rates and reduce the mental stress of the
doing the calculation manually.
1.2 STATEMENT OF THE PROBLEMS
The
Computation of Exchange Rate is done manually. The weaknesses associated with
this method include:-Time wasting to Compute Records, Improper communications
and filing of documents
Most of
records and other documents are being damaged and eaten up by insects, and
rats.
Consequently,
this project intends to develop a system that will minimise these weaknesses.
1.3 AIMS AND OBJECTIVES
Since this research is aimed at
computerizing the manual exchange rate conversion used by the Bureau de change in banks and
their outlets in the local market, it is expected that the computerize exchange
rate conversion system offer some benefits that the manual one could not offer,
these benefits forms the objectives of this research work
Some of the objectives of this new
system are:
i.
To evolve to a computer-based method, this will help to
speed up the rate of exchange conversion.
- To reduce the mental stress of performing exchange rate conversion from one currency to the other manually.
- To eliminate the problem of miscalculation encountered during manual exchange rate conversion.
- To monitor, control and manage the rate of each currency conversion automatically from the backend.
1.4 SIGNIFICANCE OF THE PROJECT
Before now, the Bureau de change in
different banks in Nigeria and their outlets have been doing manual exchange
rate conversion, the outlets at the local markets can only know the exchange
rates of different currencies from the bank before fixing their own rate for
customers or clients, the bureau de change themselves can monitor the exchange
rate of different currencies online but no software to set their own rate of
conversion and perform the calculation automatically.
However, with the introduction of
computerize exchange rate computation System, conversion is made easy and the
bureau and their outlets can set their own rate of exchange which will
automatically reflect in the transactions they will perform, its fast, easy and
saves time.
1.5 SCOPE OF THE STUDY
The scope of this study shall
specifically concentrate on ascertaining the activities Exchange rate. And it
understudies the Nigerian exchange Market, and it specifically focuses on the application
of computer on their mode of operation
1.6 LIMITATIONS OF STUDY
During the time of carrying out
this work, the researcher encountered some problems of which restricted her to
only above mentioned area, some of the limitations include:
- TIME CONSTRAINT: The time allocated to research work for this study was greatly constrained due to intense academic activities involving the researcher.
- Lack of textbooks and library facilities.
- FINANCE –The major constraints for this study occurred in the form of inadequate funds. The present high cost of material, access to a personal computer unit for running and debugging of the application program, transportation expenses to and fro the site of computer etc. militated against the smooth and easy advancement of the work.
1.7 DEFINITION OF TECHNICAL TERMS
1.
COMPUTATION: Mathematical calculation or the use of computers, especially as subject
of research.
- CURRENCY: A system of money in general use in a particular country. Example: Naira in Nigeria.
- EXCHANGE RATE: The value of one currency for the purpose of conversion to another.
- FOREX TRADE: This is the buying and selling of currencies at different rates.
- SOFTWARE: Is the general name for all programs (Instructions, Data and Document) that are executable by the computer system in order to produce the desired results.
- SPOT EXCHANGE RATE - The spot rate is the rate for a currency at today’s market prices
- FORWARD EXCHANGE RATE - A forward rate involves the delivery of currency at a specified time in the future at an agreed rate. Companies wanting to reduce risks from exchange rate volatility can buy their currency ‘forward’ on the market
- EFFECTIVE EXCHANGE RATE INDEX (EER) - A weighted index of sterling's value against a basket of currencies the weights are based on the importance of trade between the UK and each country.
- REAL EXCHANGE RATE - This is the ratio of domestic price indices between two countries. A rise in the real exchange rate implies a worsening of competitiveness for a country.