MMS Finance -- International Finance | 2019 EXCHANGE RATE PROBLEMS QL. The following quotes are avai Spot GBP/USD : 1. 62/1.63 ‘Three month swap points : 5/10 Six month swap points :9/ 6 Calculate the three moi hand six month outright forward rates, Q2. An Indian bank offers the following spot rate quotation to its customer. GBP/INR: 88.68/89.85 USD/INR: 55.69/56.04 Calculate the eable rates. Q3. You are given the following spot rates. USD/YEN: 78.50/79.00 USD/INR: 55.15/55.30 Calculate the Yen-Rupees cross rate. Q4. You are given the following information. Spot EUR/USD : 1.2105/1.2130 ‘Three month swap : 25/35 Spot GBP/USD : 1.5405/1.5420 Three month swap : 35/25 What is 3 month €/£ forward rate? QS. An Indian customer approaches a bank for issue of a Demand draft for $ 50,000. Tae spot rates prevailing are : USD/INR: 52.35/42.42. If the bank charges 0.15% as the margin, what will be the rupee outlay for the customer? Q6. A bank has to submit a quote to a customer for buying Euro against Rupees. The customer will have the option of taking delivery any time during the second month. Given the following spot and forward rates, what rate should it quote? USDIINR Spot : 55.20/55.30 One month forward : 15/25 Two month forward : 20/30 EUR/USD Spot : 1.21/1.22 One month forward : 15/10 Two month forward : 20/15 Q7. An Indian customer who has imported equipment from Germany has approached its bank for booking a forward Euro contrnet, The delivery is expected sometime during the sixth month from now. The following rates are being quoted: EUR/USD : Spot : 1.214/1.215 3 month forward : .030/.029 6 month forward : .059/ 058 . . USDAINR Spot : 53.60/53.70 3 month forward : 15/25 6 month forward : 20/30 What rate will the bank quote if it needs a margin of 0.5%? Prof. Namrata Acharya _MMS Finance — International Finance | 2019 Q8. A bank has to quote a rate to its customer for purchase of a demand export bill with transit period of 15 days, The interbank spot rate is Rs. 55.60 / § and the one month forward rate is Rs 56.00 / $. If the exchange margin charged by the bank is 0,1% what rate should the bank quote? Q9. In 1995, the DM was quoting Rs 21.50 in the interbank market. Ifa bank charges 0.125% commission for TT selling and. 0.15% for 'T buying, what rate would it quote to its clients? Q10. You have received a telex advice from your Middle East correspondent stating that 4) cithas placed (0 the credit of your account with your New York correspondent a sum of USS 500,000, ii) and requesting you to credit equivalent value in Rupees to their Rupee account with you. Inter-bank rates in Mumbai are 44.7575/44.7625. What rate would you apply and what Rupee equivalent would you credit to the account of the Middle East correspondent with you? QLL. Your exporter customer, an Export Oriented Unit, has presented to you sight documents for USS 100,000 for negotiation under a letter of credit providing for value date TT reimbursement. ‘The exchange rates a Inter-bank US$ 1 = Rs. 44.7500/7600 ‘Your customer requests the following: a. Toretain eligible amount of the bill in their EEFC account with you b. To pay a commission of 0.5% to the Indian agent as mentioned in the letter of credit. Calculate the Rupee amount to be credited to the customer's current account taking into consideration. i, an exchange margin of 0.15% is required by you ii, exchange rates to be quoted as per FEDAI guidelines — last two digits in multiples of 25 iii, Rupee amount to be expressed to the nearest Rupee Q12. You sold DEM 1 million value spot to your customer at DEM 1 = Rs 21.90 and covered yourself in Singapore market on the same day when the exchange rate were as under: Spot USS/DEM 1.8100/1.8110 Local inter-bank US$ 1 = Rs 39,50/39.52 (Brokerage paid Rs 2000) Calculate the cover rate nearest to the fourth decimal and ascertain profit or loss in the transaction to the nearest Rupee. Q13. A customer offers you a sight bill for US$ 20,000 on 2.1.1998 drawn under a letter of credit established in his favour by an American Bank. Assuming the following what Rupee amount will you credit to his account? Inter-bank US$ 1 = Rs 38.8650/8750 Transit period 15 days Interest @ 13% per annum Exchange margin 0.150% Q14. An importer-customer approached yor on Ist January 1998 for sale to him: 1. US$ 100,000 delivery 31st March 1998 E | Prof. Namrata AcharyaMMS Finance — Inte ance | 2019 5 USS 200,000 delivery (full) 30th April 1998 Assumptions: 1. Spot inter-bank 38.8500/8600 Forward premia January 0.1250/0.1350 February —_0.2950/0.3000 March 0.5400/0.5450 April 0.7600/0.7650 2. Exchange margin 0.125% 3. Last wo digit in multiples of 25 Calculate the rates to be quoted to the customers QIS5. Your forex dealer had entered into a cross currency deal in the inter-bank market and brought DEM 1 million at USD 1 = DEM 1.8010 for spot delivery. However, the market turned volatile and therefore, he squared up his position by disposing of DEM against USD at the ongoing market rates. Assuming DEM were quoted in the inter-bank market as under: Spot USD 1 = DEM 1.8100/10. If spot USD 1 = Rs 46.84/85 in the local inter-bank market, what will be the gain or loss in the transaction? Q16. On 28-01-2000, the ruling rat Inter Bank: USD 1 = Rs. 43.5850/5950. , You are authorized to retain 0.09% for a transaction involving inward remittance of USD 91,758 value spot. In rupee terms how much will your customer get and what is the effective exchange rate?