Question
A speculator working in Brisbane believes the USD will fall in value compared to the AUD in the near future. He has decided to lock
A speculator working in Brisbane believes the USD will fall in value compared to the AUD in the near future. He has decided to lock in to an available AUD 100 000 futures contract (15 December 2023) at a settlement price of USD0.8343 per 1 AUD.
Did the speculator buy or sell the futures contract?
What is the value of one contract today and what currency is it in?
If the spot exchange rate is USD 0.8005 per 1 AUD on 15 December 2023, what is the value of the contract at maturity?
Did the speculator correctly predict the movement in the exchange rate?
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