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This makes me confuse very much which rate to be applied when it is in order, for ex
Spot rate: 4.1780-4.2080 euros per $
6m forward rate: 4.2302-4.2606 euros to $The question here is The first rate is the rate that bank will buy euros from company and the second one is the bank sell euros to company, isn’t it? The order here is the position of the bank or the company bank buy-sell or company buy-sell?
Pls help. Thank you in advance.
No – the lower rate is the rate to use if the company is buying euros from the bank and paying for them in dollars.
The higher rate is the rate to use if the company is selling euros to the bank (and receiving dollars).I do suggest that you watch our free lectures on this – they explain the rule and the reasoning in full (with examples).
(Our free lectures are a complete course for Paper F9 and cover everything needed to be able to pass the exam well.)
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