Question: I have a class question that I'm struggling with. The question says assume we sold AUD 1 million 170-day forward rate, and after 70 days

I have a class question that I'm struggling with. The question says assume we sold AUD 1 million 170-day forward rate, and after 70 days we offset the forward contract by buying a 100-day forward contract. The spot exchange rate and interest rates after 70 days are:

Spot AUD/USD 0.9975

Interest rates: AU: 8.00% and US: 5.00%

170 days

Spot AUD/USD 0.9850

Interest rates: AU: 8.05% and US: 5.75%

Have we made a capital gain or loss?

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