Pacific Trading Company purchased Canadian dollars yesterday in anticipation of a purchase of electric equipment through a Canadian supply house. However, Pacific was contacted this morning by a Japanese trading company that says equipment closer to its specifications is available in 48 hours from an electronics manufacturer in Osaka. A phone call to Pacific’s bank this morning indicated that another of the bank’s customers, a furniture importer located in San Francisco, purchased a comparable amount of yen in order to pay for an incoming shipment from Tokyo, only to discover that the shipment will be delayed until next week. Meanwhile, the furniture company must pay off an inventory loan tomorrow that it received 30 days ago from Toronto-Dominion Bank.
Which of the instruments described in this chapter would be most helpful to these two companies? Construct a diagram that illustrates the transaction you, as an international banker, would recommend to these two firms to help solve their current problems.