Forex Calculation

MethodsOfPayment

Exercise 1

• A Malaysian bank agrees to buy AUD500,000 from a Malaysian exporter in 3months’ time. However, at maturity the exporter defaults. What can the bankdo now?

  Forex DetailsSpot (today)

  3.5000 – 3.65003

  Months’ forward

  0.94c – 0.89c

  PmSpot (3 months later)

  3.3000 – 3.4250.

Resolve:

CleanShot 2021-11-12 at 15.20.34@2x

• Malaysian bank agrees to sell AUD350,000 to a Malaysian importer in 3months’ time. However, at maturity the importer refuses to accept the USD100,000. What can the bank do now? (Note: Use the forex rates from the previous page.)

CleanShot 2021-11-12 at 15.35.56@2x

Exercise 2

Malaysian bank agrees to sell NZD50,000 at 1.7500 to a Malaysian importertoday, who later changes his mind tomorrow and only requires NZD40,000.What is the bank’s position as a result of this unforeseen change?

<u style="box-sizing: border-box;">Forex DetailsSpot</u>

(on the next day)

1.7700 – 1.8300

CleanShot 2021-11-12 at 15.45.33@2x

Exercise 3

A Malaysian bank agrees to a forward contract with a Malaysian exporter to buyCAD400,000 at MYR3.6500 = CAD1. Proceeds were delayed from Canada, andthe exporter asks for a one-month extension fixed. What should the bank do? Answer = (31200)

<u style="box-sizing: border-box;">Forex DetailsSpot -</u>

• 3.7155 – 3.7280

1-month forward 4c – 5c premium

CleanShot 2021-11-12 at 15.56.08@2x

CleanShot 2021-11-12 at 16.00.10@2x