Question: XYZ Ltd. is an export oriented business house based in Mumbal. The Com In cusomers' currency its receipt of us $ 1,00000 is due on

XYZ Ltd. is an export oriented business house based in Mumbal.

XYZ Ltd. is an export oriented business house based in Mumbal. The Com In cusomers' currency its receipt of us $ 1,00000 is due on Seplember 1,200g Market informaion as at June 1, 2009 is: CurrencyFutures Exchange Rates | Contract size |472,000 US SR US SR 0.02126 Spot 0.02140 June 0.02118 1 Month Forward 0.02136 Seplember 3 Months Forward 0.02127 Interest Rates in Inda Inital Margin 10,000 June 800% September 15,000 On September 1, 2009 the spot rate US SRe. is 0.02133 and currency future rate 002134. Comment which of the following methods would be most advantageous for X2 Ltd. (a) Using forward contract (b) Using currency futures (c) Not hedging currency risks t may be assumed that variaton in margin would be settled on the maturity of the futres contract

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