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Dear Sir,
May i ask the logic for money market?
Why we will borrow now for cover the investment(receivables) and invest now for cover the payables?Thank you.
So that the conversion happens ‘now’ rather than on a future date.
We obviously know the current exchange rate, but by the future date it is likely to have changed which means there is risk if we wait until the future date to convert.
Have you not watched my free lectures on money market hedging?
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