CAIIB BFM EXCHANGE RATES AND FOREX BUSINESS UNSOLVED PROBLEMS 5 BY VISHAL MANTRI 9960560404

Rate for forward purchase booking of USD 100,000 delivery 3rd month (full month) if USD/INR spot is 48.7850/7950 and premium is 1m 0.08/0.09, 2m 0.16/0.17, 3 month 2500/2550. Ignore margins Buy low, sell high maxim: Buy at lowest and sell at the highest rate of the 2 rates before and after the given date. We want for 3rd full month. So take 2nd month and 3rd month rate. You are buying. Find the rates now: Currency is at premium. Why? Bcoz right side of the rates is higher than left side. So add the forward points to spot rate. 2 month: 48.7850+0.16 = 48.945, 3 month: 48.785+0.2500 = 49.035. Buy at lowest of the 2 rates. So take, 48.945. No margins. Amount paid to the customer = 48.945 x 100000 = Rs. 4,894,500

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