Hi Dear Tutor, I watched your lecture and I am confused by the example 2.
The amount owed by jimjam is 240000 R $.
From my point of view, R$;s exchange rate is increased based on prior overall amount therefore its current exchange rate is 9.2530 because otherwise there is no way multiplying overall $ currency with its $ exchange rate.
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Foreign exchange risk management
6y ago#1I do not understand what you mean by "R$'s exchange rate is increased based on prior overall amount". What prior overall amount??
The exchange rate is given as IR/R$ 8.6380 - 9.2530.
Therefore 1R$ is equal to 8.6380 or 9.2530 IR's depending on which way we are converting. Here we are buying R$'s and so we convert at 9.2530. If we were selling R$'s then we would convert at 8.6380.
Now understood my tutor, I just thought that
I just thought that IR/R$ 8.6380 – 9.2530 8.6380 IR equal to 9.2530 R$.Now understood
6y ago#4You are welcome :-)
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