An Omani firm has to make payment of 3 million INR to Indian Company after 30 days. Since the company exposing the risk of currency fluctuation so purchased the forward contract at OMR0.006279 = 1 INR. the spot rate after 30 days was OMR 0.006542/INR  Which of the following will be the profit or loss to the firm, if they execute the forward contract?     a. Loss of OMR 789 b. All the options are wrong c. Profit of OMR789 d. Profit of OMR 526 e. Loss of OMR 526

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Q: 21-Mr. Ali is an Omani exporter and expected to receive 200 million INR after 30 days from its…

A: An exchange rate is the value of one currency in terms of another country's currency.

Q: Suppose that two counterparties, A and B, enter a three-month forward contract on January 1st,…

A:

Q: Suppose you, a German importer, expect to pay $1 million in 90 days for taking delivery of import…

A:

Q: Credible Research sold a microchip to the Vausten Institute in Germany on credit and invoiced €10…

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A: Gain or loss = Contract value * ( Forward rate - Spot rate )

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A:

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Q: Use the following information for Problems 11 and 12.MNC Corp. (a U.S.-based company) sold parts to…

A:

Q: JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from…

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Q: ABC Company, an Australian firm, has a USD 385 million payable in one year. ABC is concerned that…

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Q: JJ Fashion Wholesalers Ltd, an Indian clothing manufacturer, has a contract to purchase cotton from…

A:

Q: Suppose a German importer owes an Australian exporting company 150,000 AUD, due in three months.…

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Q: The spot foreign exchange rate for the US dollar is 0.69056 Euros. Your company agrees to pay a bank…

A: Current spot rate= $1=0.69056

Instruments of Foreign Exchange Market

Foreign exchange is a worldwide market in which one nation’s currency is converted into another nation’s currency. In further terms, exchanging of nations currency with foreign currencies. Foreign exchange happens at a specified rate which is termed the foreign exchange rate. The exchange rates are not constant continuously changing as they are derived by market forces of supply and demand. Widely used foreign currencies are the United States- dollar, Euro, Japanese Yen, British pound, and Australian dollar. US- dollar is the most denominated foreign currency. The Euro to US dollar is a widely used currency pair in the forex market as these two currencies represent the world’s enormous economy. Forex trade is simple as exchanging currencies at the bank. The main players of forex markets are the central banks, financial institutions, intermediaries, investments banks, and other banks. Central Bank is the supreme player who decides the currency value of their own nation on the forex market. Mostly foreign exchange-traded at FX market (forex market) when tourists’ visits a foreign country, import, and export happens between two countries.