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Lemon Express: Currency Quest
Pearson Edexcel IGCSE Business 4BS1 EXAM YEARS 2026-2029 Exchange rate calculations
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Exchange rate calculations in IGCSE Business: what you need to know
This free game is part of our Pearson Edexcel IGCSE Business (4BS1) course for exams in EXAM YEARS 2026-2029.
What is an exchange rate?
An exchange rate is the price of one currency in terms of another. It is written as a currency pair, such as GBP/USD = 1.25. The first currency (GBP) is the base currency, so this means £1 buys $1.25.
In Lemon Express: Currency Quest you ride a train through five chapters: The Golden Rule, Deal Day, The Currency Seesaw, Baron Von Spread and The Currency Crunch. Each chapter builds one skill you need for exam calculations.
The golden rule: multiply or divide?
- Pounds into a foreign currency: multiply by the rate. £200 at GBP/USD 1.25 = 200 × 1.25 = $250.
- Foreign currency into pounds: divide by the rate. €345 at GBP/EUR 1.15 = 345 ÷ 1.15 = £300.
A quick check: a pound buys more than one dollar or euro here, so the foreign amount should always be the bigger number.
Percentage change, appreciation and depreciation
If the rate goes up, the pound buys more foreign currency, so it has appreciated (got stronger). If the rate goes down, the pound has depreciated (got weaker).
To work out the percentage change: (new rate − old rate) ÷ old rate × 100. For example, GBP/USD rises from 1.25 to 1.30: (1.30 − 1.25) ÷ 1.25 × 100 = 4%. The pound has strengthened by 4%.
SPICED and WPIDEC
Exchange rates change the prices of imports and exports. Two memory tricks help:
- SPICED: Strong Pound, Imports Cheaper, Exports Dearer.
- WPIDEC: Weak Pound, Imports Dearer, Exports Cheaper.
So a UK exporter is happiest when the pound weakens, and a UK importer (or a UK tourist abroad) is happiest when the pound strengthens.
Buying and selling rates: the spread
Banks and bureaux de change quote two rates: one when they sell you currency and a different one when they buy it back. The gap between them is called the spread, and it is how they make a profit. Always check which rate a question gives you before you calculate.
Frequently asked questions
How do you convert pounds into another currency?
Multiply the amount in pounds by the exchange rate. For example, £100 at GBP/EUR 1.15 is 100 × 1.15 = €115.
How do you convert a foreign currency into pounds?
Divide the foreign amount by the exchange rate. For example, $250 at GBP/USD 1.25 is 250 ÷ 1.25 = £200.
How do you calculate the percentage change in an exchange rate?
Subtract the old rate from the new rate, divide by the old rate and multiply by 100. A rise from 1.25 to 1.30 is a 4% increase, so the pound has appreciated by 4%.
What does SPICED stand for?
Strong Pound, Imports Cheaper, Exports Dearer. When the pound is strong, UK businesses pay less for imports but their exports become more expensive for foreign buyers.
Is Lemon Express: Currency Quest free?
Yes. The game is free to play in your browser with no sign-up. It covers exchange rate calculations from the Pearson Edexcel IGCSE Business (4BS1) specification.