1. Answer in brief the following questions with justifications.

1. Indian foreign exchange market is quoting USD/INR spot 75.30/75.32 (75.30/32). ABC India has received USD 5 mn today. At which exchange rate this inward remittance will be

converted into INR?

2. AB Ltd has a USD account with State Bank of India. They have to pay their import bill

in JPY. USD/JPY is quoted at 109.40/109.45 (109.40/45). At which rate ABC Indias import

transaction will be taken up?

3. India Medtronic imports certain medical instruments from Germany and sells them to

some of the leading hospitals of India. Import bills are in EUR. Local sales invoice is done in

INR. One equipment with a value of EUR 2 mn is sold to Apollo Hospital. EUR/INR is quoted by the bank as 88.80/88.82. (88.80/82). Which of these rates will be picked up by India Medtronic to invoice Apollo Hospital?

4. AB Ltd has ordered one scientific equipment from Switzerland for one of their projects in

Bangladesh. USD/CHF is quoted at 0.9030/0.9035 (0.9030/35). ABC will be paying the Swiss seller from its USD account with Citi Bank, Mumbai. At which rate this import payment will be taken up?

5. In the above transaction, the consignment will not land in India. It will directly reach the Bangladesh worksite. This transaction will be treated as:

a. High sea sales

b. Merchanting trade

Explain with reasons the choice you make.

2. An Indian company had taken a long-term loan in JPY at 0.10%. Repayment

scheduled after six months. Indian company is planning to pay this JPY loan from its USD

account. USD/JPY is current quoted in spot market 109.50. USD is expected to appreciate

against JPY in the coming months. Is this USD/JPY movement is in favour of the

Indian company? Explain

3. With Covid still at large and the EURO/INR being unpredictable, would you advise Mr A, who exports fruits to buyers in Austria and Germany, to hedge his future earnings? Explain with reasons for both scenarios- for and against, in your own words.