Suppose that Retrojo Inc. is a U$.$S$.$ based MNC that will need to purchase F$$1\mathrm{.}60$ million $($Fijian dollars, F$$)$ worth of imports from Fiji in $90$ days.

Currently, the spot rate for the Fijian dollar is $$0\mathrm{.}69$ per F $$.$

If Retrojo were to exchange U$.$S$.$ dollars for the required $F$$$1,600,000\mathrm{.}00$ Fijian dollars, it would need

$($U$.$S$.$ dollars$).$ If

Retrojo waits $90$ days to make this exchange $($perhaps due to insufficient funds on hand$),$ and the Fijian dollar appreciates to $$0\mathrm{.}80$ during those $90-$

days, then Retrojo would need

$($U$.$S$.$ dollars$).$ Thus, if Retrojo believes that the Fijian dollar will appreciate, it can

$\text{'}$ its exposure to such exchange rate risk by locking in the original exchange rate through the use of a forward contract.