Suppose that Retrojo Inc. is a U$.$S$.$ based MNC that will need to purchase F $$1\mathrm{.}10$ million $($Fijian dollars, F$$)$ worth of imports from Fiji in $90$ days. Currently, the spot rate for the Fijian dollar is $$0\mathrm{.}63$ per $F$$$.$

Suppose that Retrojo negotiates a forward contract with a bank, which $$mmits it to purchasing Fijian dollars at F $$1,100,000\mathrm{.}00$ at $$0\mathrm{.}63$ per Fijian dollar in $90$ days. Thus, Retrojo knows with certainty that it will need $F$$$1,100,000\mathrm{.}00$$$0\mathrm{.}63$ per Fijian dollars $=$$$693,000\mathrm{.}00$ for this exchange.

Assume the Fijian dollar depreciates over this time period to $$0\mathrm{.}53$ per Fijian dollar. If this were the case the, outside of the contract with the bank, only $($U$.$S$.$ dollars$)$ would be needed to exchange for the required $F$$$1,100,000\mathrm{.}00.$