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The treasurer at an Indian company requires Rs.10 million for six months. He is exploring various options of financing and has collected the following information:
The treasurer at an Indian company requires Rs.10 million for six months. He is exploring various options of financing and has collected the following information: Rs./$ Rs./ Spot 46.90/95 65.35/40 6m forward 70/90 paise 90/100 paise Expected spot rate after 6m 47.50/55 66.90/95 Interest rate Rs. 12.00% 6 months 4.00% 5.00% You are required to advise the treasurer in which currency to borrow, if he a. Covers the exchange risk in forward market b. Keep the open position
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