Mohan Textiles has imported cotton from Ng Exports inCambodia for Cambodian riel (KHR) 40 million on May 20,and Mohan Textiles will pay the amount on July 20. Teexchange rate on May 20 is INR 1 = KHR 86.3844. Since Mohan Textiles is concerned about currency risk, it enters intoa non-deliverable forward contract with the IDBI Bank for anotional amount of KHR 40 million. According to the forwardcontract, the forward rate is fxed at INR 1 = KHR 86.4356, with expiry on July 20. If the actual spot rate on July 20 is INR 1 =KHR 87.3542, what will be the settlement on july 20?

Answer rating: 100% (QA)

To calculate the settlement on July 20 we need to compare the actual spot ra... View the full answer