If an UK exporter has $350000 receivables and 6m forward rate is $/€ 1.6100-1.6140 what will he do to cover himself??
Share
Please briefly explain why you feel this question should be reported.
Please briefly explain why you feel this answer should be reported.
Please briefly explain why you feel this user should be reported.
It’s already mentioned Forex forward cover
Hello Sir.
Thanks for guiding me.
With the given data , let’s assume the exporter will hedge himself through forward cover.
Hence, he will forward sell $ @ 1.6140
Hence , his inflow = 350000/1.6140 = €216853
Thankyou
Here, the price currency is dollar and base currency is pound.
Therefore when the dollar are receivable it means you sell dollar $ i. e. price currency and buy pound £ I. e. base currency.
So,we the use the rate 1.6140 $\£ for the forward cover.
The amount receivable in HOME CURRENCY i. e. pound is $350000/1.6140$\£ =216853£
I hope this will help you.
Thankyou so much.