GCSE Maths Practice: currency-conversion

Higher GCSE Currency Conversion with Three-Decimal Exchange Rates

At Higher GCSE level, currency conversion questions are designed to test more than basic multiplication. You are expected to work confidently with decimals, interpret exchange rates accurately, and apply correct rounding at the end of the calculation. Exchange rates with three decimal places are especially common because they require careful attention to detail.

Understanding What the Exchange Rate Means

An exchange rate such as £1 = €1.245 means that every pound is worth one euro and 24.5 cents. Because the exchange rate is greater than 1, converting from pounds to euros will increase the numerical value. Recognising this helps you judge whether your final answer is sensible.

Before calculating, it is useful to estimate. For example, rounding €1.245 to €1.25 gives a quick estimate. Multiplying £275 by €1.25 would give a value just under €350, so the final answer should be slightly less than that.

Correct Method for Higher Tier Questions

Use a structured approach to reduce mistakes:

• Write the multiplication clearly.
• Multiply using full decimal precision.
• Do not round during intermediate steps.
• Round the final answer to two decimal places.

Rounding part-way through the calculation is a common Higher-tier error and often leads to an incorrect final answer.

Worked Example (Different Numbers)

Suppose the exchange rate is £1 = €1.238.

Convert £320 to euros.

Step 1: Estimate first. £320 × 1.25 ≈ €400, so the answer should be slightly lower.

Step 2: Multiply: 320 × 1.238 = 396.16

Step 3: Write the final amount → €396.16

Another Example

If £1 = €1.192 and someone exchanges £415:

415 × 1.192 = 494.68 → €494.68

Common Higher-Tier Mistakes

• Incorrect decimal placement: Always count decimal places carefully.
• Rounding too early: This reduces accuracy.
• Ignoring estimation: Estimation helps catch major errors.
• Choosing a neat-looking answer: Correct answers are often not round numbers.

Real-Life Context

Accurate currency conversion is important in many real-world situations, such as:

• Booking international travel or accommodation
• Converting large online purchases
• Managing overseas expenses
• Understanding bank and exchange bureau rates

Frequently Asked Questions

Why do Higher GCSE questions use three-decimal exchange rates?
They test precision, careful calculation, and correct rounding.

Should I always estimate first?
Yes. Estimation helps you judge whether your final answer is reasonable.

Do I always round to two decimal places?
Yes, because most currencies are written to two decimal places.

Study Tip

For Higher GCSE currency conversion, estimate first, calculate carefully using full precision, and round only once at the end. This habit greatly reduces errors.