Example:
Exchange rates quoted today are:
Spot rate 0.5120 - 0.5152 £ / $
One-month forward rate 0.5141 - 0.5171 £ / $
Three-month forward rate 0.5171 - 0.5202 £ / $
Which is the buying rate and which is the selling rate for the bank?
I am quite confused.
Please confirm if i am right.
The bank buys at 0.5120
The bank sells at 0.5152
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Hedging/Exchange rate
8y ago#1It depends which currency the bank is buying or selling - funds or dollars!
Also, it is not the bank that really matters - it is what rate the company will use for conversion that matters.
I explain all this in great detail (with examples) in the first of my free lectures on foreign exchange risk management (and I am not going to type out all my lectures again here :-) )
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