function addNewRow() {
var tbody = document.getElementById("transactionBody");
var row = document.createElement("tr");
row.className = "transaction-row";
row.innerHTML = '
' +
'
' +
'
';
tbody.appendChild(row);
}
function removeThisRow(btn) {
var row = btn.parentNode.parentNode;
row.parentNode.removeChild(row);
}
function resetCalculator() {
var tbody = document.getElementById("transactionBody");
tbody.innerHTML = '
' +
'
';
document.getElementById("resultDisplay").style.display = "none";
}
function calculateWeightedAverage() {
var amounts = document.getElementsByClassName("amount-val");
var rates = document.getElementsByClassName("rate-val");
var totalAmount = 0;
var totalWeightedSum = 0;
var validInputs = 0;
for (var i = 0; i 0 && rate > 0) {
totalAmount += amt;
totalWeightedSum += (amt * rate);
validInputs++;
}
}
if (validInputs === 0 || totalAmount === 0) {
alert("Please enter valid positive amounts and exchange rates.");
return;
}
var weightedAverage = totalWeightedSum / totalAmount;
document.getElementById("totalVolume").innerText = totalAmount.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("totalCost").innerText = totalWeightedSum.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2});
document.getElementById("weightedAverageResult").innerText = weightedAverage.toFixed(6);
document.getElementById("resultDisplay").style.display = "block";
}
How to Calculate Weighted Average Exchange Rate
In global finance and multi-currency accounting, understanding the true cost of your currency acquisitions is vital. A simple average often provides a misleading picture because it ignores the volume of each transaction. To get an accurate figure, you must use the Weighted Average Exchange Rate (WAER).
What is the Weighted Average Exchange Rate?
The weighted average exchange rate is the mean value of various currency exchange transactions where each rate is adjusted based on the proportion of the total currency amount it represents. This is particularly useful for businesses that buy foreign currency at different times throughout a month or year.
The Weighted Average Formula
The mathematical formula to calculate the weighted average rate is:
WAER = (Σ (Amount × Rate)) / Σ Amount
Where:
Amount: The quantity of base currency acquired in a single transaction.
Rate: The exchange rate applied to that specific transaction.
Σ (Amount × Rate): The sum of the total costs of all transactions.
Σ Amount: The total volume of currency acquired across all transactions.
Step-by-Step Calculation Example
Imagine a company buying Euros (EUR) using US Dollars (USD) in three separate batches:
Transaction 1: Bought 10,000 EUR at a rate of 1.10 USD/EUR. (Cost: 11,000 USD)
Transaction 2: Bought 5,000 EUR at a rate of 1.15 USD/EUR. (Cost: 5,750 USD)
Transaction 3: Bought 20,000 EUR at a rate of 1.08 USD/EUR. (Cost: 21,600 USD)
Step 3: Divide Total Cost by Total Volume
38,350 / 35,000 = 1.0957.
In this case, the weighted average rate is 1.0957, which is more accurate than a simple average of the rates (1.11).
Why Use Weighted Averages for Forex?
Using a simple average is dangerous for treasury management. If you buy a small amount at a very high rate and a massive amount at a low rate, the simple average will be high, even though your actual "break-even" point is much lower. The WAER is used for:
Tax Reporting: Calculating capital gains or losses on foreign currency holdings.
Inventory Valuation: Valuing goods purchased in foreign currencies.
Portfolio Management: Understanding the actual entry price of a currency position.