-You have an import payment in CHF. You are maintaining USD account with ABC Bank. Inter...

-You have an import payment in CHF. You are maintaining USD account with ABC Bank. Inter Bank spot rate for USD/CHF – 0.9974/98. What will be the rate quoted by the bank for your import transaction in CHF.
-Your export payment in USD has come to the bank. You want to convert this USD into INR.
Spot rate USD/INR =: 67.76/78.17. At what price will the USD be converted to INR. Bank may load profit margin of 5 paise.
-You have an export receivable in GBP after 3 months from today. You want to book a 3 months forward for this export receivable in GBP against USD. Find out the Forward Rate 3 months GBP/USD.
Spot : GBP/USD 1.2501/1.2720
3 Months forward discount/premium: 61/60
-Spot rate of EUR/USD : 1.08226 and GBP/USD 1.270 is quoted in New York. What would be the price of GBP/EUR in New York?

Solutions

Expert Solution

1)since we have imported , so we have liability to make payment which is to be settled in CHF.

we have CHF payable. Quote = 0.9974/0.9978 USD/CHF. since we have CHF payable and CHF is the base currency in the quote , so the bankwill quote ask rate i.e. 1 CHF = 0.9978

2) since the quote is USD/INR = 67.76/78.17 and practically we know that USD is strong currency compare to INR, hence quote's actual presentation will be INR/USD = 67.76/78.17. since we have received DOLLAR and we want to convert it to INR .i,e. sell dollar and buy INR, since USD is the base currency , and we want to sell USD , so the bank will quote lower rate i.e. 1 USD = 67.76 INR(bid rate)

after charging profit margin of 5 paise , rate offered will be = 1 USD = 67.76-0.05= 67.71 INR

3) since the quote is GBP/USD 1.2501/1.2720 and practically we know that GBP is strong currency compare to USD, hence quote's actual presentation will be USD/GBP = 1.2501/1.2720

spot rate = 1.2501/1.2720 USD/GBP

forward rate = 1.2501-0.0061 / 1.2720-0.0060 = 1.2440/1.2660 USD/GBP(SwaP Adjustment)

since we'll receive GBP and we want it to convert to USD and in the quote GBP is the base currency i.e.sell GBP and buy USD 3 month forward. rate applicable will be lower of the forward rate i.e.1 GBP = 1.2440USD

or 1USD = 1/1.244 = 0.8039 GBP

4) given USD/ EUR = 1.08226 ( since euro isstrong)

USD/GBP = 1.270 (since GBP is strong)

so in same fashion demand is EUR/GBP = ?

EUR/GBP = 1.270/1.08226

EUR/GBP = 1.1735

jeff jeffy answered 1 year ago

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