You are in charge of an Australian company with significant operations in France.  You have been watching the news recently and you have noticed that the Australian dollar has been going up in value against the US dollar, but not changing relative to the Euro.  You are concerned that this may change and you are expecting a payment of €20 million in 6 months. As a result, you are interested in determining what the forward rate would be with which you could use to hedge this position (e.g. the EUR/AUD forward rate).  You face the following spot rates: SAUD/USD =1.2327, SEUR/USD = 0.7664 and annual interest rates: USD = 2.8350%, AUD = 2.6950% and EUR = 2.1913%.  To simplify, you can divide each annual rate by 2 and use as the 6-month rate.

Answer rating: 100% (QA)

To determine the forward rate for EURAUD you can follow these steps Calcula... View the full answer