Forex Calculation
Exercise 1
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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:
- 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.)
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
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
