Malaysias annual inflation rate climbed to a one-year high of 3.4% in June of 2022 from 2.8% in the prior month, topping market consensus of 3.1%. Food prices rose at a record pace of 6.1 percent after gaining 5.2 percent in May, amid robust consumption following further improvement in COVID-19 situation. Additional upward pressures also came from cost of housing (1.2% vs 1.2%), transport (5.4% vs 3.9%), alcoholic beverages & tobacco (0.4% vs 0.4%), clothing (0.2% vs flat reading), health (0.6% vs 0.4%), recreation (2.2% vs 1.8%), education (1.1% vs 1.0%), restaurants & hotels (5.0% vs 3.7%), and miscellaneous goods & services (2.2% vs 1.9%).

Besides, the war between Ukraine and Russia and Malaysia Ringgit depreciate compared to US dollar contribute to inflation in Malaysia. Therefore, you have asked your broker to trade for RM200 million of Futures Kuala Lumpur Interbank Offered Rate Three-Months (FKB3) between September 2022 and December 2022.

In July 202, the contract months are quoted as follows:

July 2022 : 95.02

August 2022 : 95.11

September 2022 : 95.17

October 2022 : 95.21

November 2022 : 95.27

December 2022 : 95.31

Assume that in September 2022, the contract months are quoted as follows:

3^rd quarter in 2022: 95.44

4^th quarter in 2022: 95.78

1^st quarter in 2023: 95.96

2^nd quarter in 2023: 96.03

Required:

1. Calculate the net realised profit or loss if the commission charges are RM100 per round turn.

2. When should the trader enter the KLIBOR futures market in order to protect from the risk arising? Construct your strategy.

3. Why KLIBOR is important to the player in the futures market? Elaborate.