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Suppose the current spot rate is $0.136/TL and the 1-year forward rate is $0.123/TL. The interest rates in the Eurocurrency market for TL and $
Suppose the current spot rate is $0.136/TL and the 1-year forward rate is $0.123/TL. The interest rates in the Eurocurrency market for TL and $ are 11% and 3% per annum respectively. A Turkish company will be paid $550000 in 1 year. The company wants to hedge its transaction exposure.
Form a forward market hedge to protect the company against FX risk.
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