Pernod-Ricardthe French distilleris exporting to Thailand and is concerned about the euro value of its Thai bahtdenominated
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Pernod-Ricard—the French distiller—is exporting to Thailand and is concerned about the euro value of its Thai baht–denominated sales revenue. It considers two forecasts for the 90-day baht/euro exchange rate.
The current spot rate is THB 40 = €1. The first forecast puts the baht at 45. 50 whereas the second forecast is 41 and the forward rate is 42. Ninety days later the spot rate stands at 43.
a. Which forecast turns out to be more accurate?
b. Which forecast proves to be more helpful from a hedging perspective?
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Related Book For
International Corporate Finance Value Creation With Currency Derivatives In Global Capital Markets
ISBN: 9781119550464
2nd Edition
Authors: Laurent L. Jacque
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