Question
Vistara Ltd. has imported spare parts worth 1 million USD and the invoice is payable in 180 days. Current Spot rate in the market is
Vistara Ltd. has imported spare parts worth 1 million USD and the invoice is payable in
180 days. Current Spot rate in the market is USD/INR 75.
You are required to calculate impact on transaction exposure under following scenarios:
a. Company decides to use Forward Market for hedging and wants you determine the 180 days forward rate (based in IRP) given interest rates in India as 6% per annum and Interest rates in US as 1% per annum and suggest the relevant position it should take in this forward.
b. Is it always necessary that the forex exposure should be hedged? What will you suggest to Vistara if USDINR is expected to be around 76 after 180 days.
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The Legaltech Book
Authors: Susanne Chishti ,Sophia Adams Bhatti ,Akber Datoo ,Drago Indjic
1st Edition
1119574277, 978-1119574279
