Let's assume Alice lends
5000 EUR to Bob for
three months (because that's what Bob asked for). But Alice's bank account is in
So, on 1st of January 2018, Alice looks at the exchange rate of EUR/USD and sees it's
On 1st of January Alice converts
6000 USD to
5000 EUR and gives them to Bob.
After three months, on 1st of April, Alice will get the money back from Bob.
Assuming they did not discuss about the currency issues, how much money will Alice get back from Bob, as the exchange rate was on 31 March
Will Bob have to send to Alice
6000 USD or
6150 USD (5000 * 1.23)?
Another case is if Bob's account is in yet another different currency (e.g. GBP). How would things work in that case?
Bob asks Alice for
5000 EUR, because that's a common currency in that specific location (e.g. Europe), that both Alice and Bob understand.
1st of January
Alice takes from her bank
6000 USDand Bob receives
4400 GBP(6000 * 0.74, or 5000 * 0.88).
1st of April
Bob needs to send the money back to Alice.
How much will Bob send and how much will Alice receive?
Again, this assumes they didn't really talk about currencies on 1st of January. Bob asked for
5000 EUR, Alice asked him if
6000 USD is fine, he receiving
4400 GBP, they agreed and the money was sent.
Also, in this context we forget about bank fees and related stuff. But if we would take care of it, how would that modify the problem?