2. Weighted Average Exchange Rate Method
In locations Where the exchange rate fluctuates significantly during a month, using
the weighted average is the preferred method to calculate a realistic exchange rate.
The weighted average exchange rate is the average of the exchange rates over a
given period of time, It is calculated by multiplying each rate by the amount
exchanged at that rate, adding the three subtotals together and dividing by the total
USD amout exchanged. Using the same example, the table below shows the exchange
rate at which costs can be converted back to USD for reporting on expenses.