Documentary acceptance bills are usually subject to dis count at the Bank of France rate for the last five days and at the private discount rate for the balance of the time.
Discountable bills on first-class commercial firms are dis counted at the open market rate.
A reduction in the discount rate of the Bank of France produces a fall in the London price of long bills on Paris and also produces a rise in French exchange.
Drafts on French banks are debited to the account on re ceipt of the relative advices. Interest on the amounts of drafts not promptly presented is therefore a source of rev enue to the French bank.
Overdrafts in French accounts are expensive, as the rate of interest on debit balances is usually greater than in the case of any other European account.
French bankers usually charge an extra commission for telegraphic transfers to firms or persons not classified as bankers.
.5. how Paris quotes exchange.—The usage in French quotations is to give the value of the foreign money in francs. For this purpose 100 units of the foreign money are taken as the basis except in the case of the pound sterling when a single pound is used. On a sight or check basis the quotations are as follows: London 25.13 francs per 1 Germany 123% " " 100 marks Latin Union 99%6 " " 100 francs Holland 208% " " 100 florins Russia 264% " " 100 roubles Austria 104%c " " 100 crowns New York " " 100 dollars 6. French exchange in New York.—(a) Quota tions at so many cents to the franc are used only in minor exchange operations and drafts drawn on small French towns. The conversions in this case resolve themselves into simple problems in multiplication or division.
(b) Franc quotations—So many francs to the dol lar are the reverse of all the usual exchange quota tions, so that a higher rate means cheaper or lower exchange; i.e., more francs are received for the dollar.
Thus :— $1,000 at 5.18% will purcbase....Fcs. 5181.25 $998.80 at 5.18% will purchase....Fcs. 5181.25 Franc quotations advance % of a centime per dol lar or about of a cent per franc. It will also be noticed that the advance of % of a centime in the above illustration corresponds roughly to a decrease of % of 1 per cent in the dollar value.
For an ordinary transaction this advance of % of a centime is sufficient, but in large transactions where the quotations are necessarily close, the "shading" is effected by increasing or decreasing the quotation by of 1 per cent, etc. This plus or minus fraction
does not, however, apply direct/11 to the rate, but means %4 or %2 of 1 per cent, etc., on the amount of dollars converted at the rate of or 520 as the case may be.
Francs into Dollars at a Fractional Rate: Fcs. 1,000 at equals $193.0037 Fcs. 1,000 at plus 1/64 193.0037 plus 1/64 of 1% .0301 equals $193.0338 A plus fraction makes the francs cost more. A minus fraction makes the francs cost less. Dollars into Francs at a Fractional Rate: $1,000 at equals Fcs. 5181.25 $1,000 at plus 1/64 Fcs. 5181.25 less 1/64 of 1% of itself .81 equals Fcs. 5180.44 1/64 of 1% of $1,000 is .15% cents which at the above rate equals 81 centimes, to be deducted from the franc amount as above.
A plus fraction decreases the number of francs received.
A minus fraction increases the number of francs received.
7. Fractional quotations.—It must always be borne in mind that the fraction (plus or minus) refers to the dollar amount only in any exchange quotation, a plus fraction makes francs (or marks or florins) cost more dollars, a minus fraction makes francs (or marks or florins) cost less dollars.
This, at first sight, may appear to be complicated, but a little practical experience and the assistance of the following table should make it quite clear.
From the above it will be noticed that %4 makes a difference of .000030 in the dollars, and .00081 in the francs column. The rate 520 %G4 decreases the value of the francs over the 520 rate by .000030 to .192277 cents but increases the value of the dollar .00081 to Fes. 5.20081.
The above, or any franc exchange table, will show at a glance how the dollar value decreases as the franc value increases,the franc at 520 being worth 19.2307 cents, while at 523% it is worth only 19.1158 cents. The effect of the fractional shadings should also be studied until they are fully understood. As pointed out above the fraction refers to the dollar amount only: it can be applied to the franc quotation, however, if the sign is reversed.