Rick thinks that US dollar will continue to depreciate relative to other major currencies. He believes that Japanese Yen will be a good currency to hedge the risk. The exchange rate is $0.0091 per yen. He needs to hedge $100 million. Please search the CME or ICE futures products and advise him which futures contract he should use. Please also determine whether he should long or short in the futures contract and how many contracts. 

How much does he gain or lose if the exchange rate at the end of the contract is (a) $0.01 per yen; (b) $0.008 per yen? 

I was looking at https://www.cmegroup.com/trading/fx/g10/japanese-yen_quotes_globex.html for what contract i should use:

 

Transcribed Image Text:

MONTH APR 2021 MAY 2021 JUN 2021 JUL 2821 SEP 2021 DEC 2021 MAR 2022 JUN 2022 SEP 2022 DEC 2022 OPTIONS OPT OPT OPT OPT OPT OPT OPT OPT OPT OPT CHARTS al ... E = al 7 = LAST 0.0091525 0.009157 0.009158 I I " I CHANGE -0.0000135 -0.000012 -0.000013 PRIOR SETTLE 0.009166 0.009169 0.009171 0.009174 0.0091795 0.0091895 0.009206 0.0092225 0.009240 0.0092565 OPEN 0.009155 0.009157 0.0091655 1 1 I HIGH 0.009159 0.009157 0.009170 1 I I LOW 0.0091505 0.009157 0.0091545 I F I VOLUME 18 9 19,951 0 0 0 0 0 UPDATED 01:07:49 CT 26 Mar 2021 01:02:18 CT 26 Mar 2021 01:10:18 CT 26 Mar 2021 18:39:33 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 18:39:09 CT 25 Mar 2021 18:41:11 CT 25 Mar 2021 18:40:06 CT 25 Mar 2021 MONTH APR 2021 MAY 2021 JUN 2021 JUL 2821 SEP 2021 DEC 2021 MAR 2022 JUN 2022 SEP 2022 DEC 2022 OPTIONS OPT OPT OPT OPT OPT OPT OPT OPT OPT OPT CHARTS al ... E = al 7 = LAST 0.0091525 0.009157 0.009158 I I " I CHANGE -0.0000135 -0.000012 -0.000013 PRIOR SETTLE 0.009166 0.009169 0.009171 0.009174 0.0091795 0.0091895 0.009206 0.0092225 0.009240 0.0092565 OPEN 0.009155 0.009157 0.0091655 1 1 I HIGH 0.009159 0.009157 0.009170 1 I I LOW 0.0091505 0.009157 0.0091545 I F I VOLUME 18 9 19,951 0 0 0 0 0 UPDATED 01:07:49 CT 26 Mar 2021 01:02:18 CT 26 Mar 2021 01:10:18 CT 26 Mar 2021 18:39:33 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 21:06:07 CT 25 Mar 2021 18:39:09 CT 25 Mar 2021 18:41:11 CT 25 Mar 2021 18:40:06 CT 25 Mar 2021

Answer rating: 100% (QA)

Hedging with USDJPY Futures for Rick Analysis Rick believes the US dollar will depreciate against the Japanese Yen To hedge this risk he should enter ... View the full answer