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OKAN (SEP/DEC 19)

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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May 28, 2023 at 8:00 pm #685262
simranxdeep
Participant
- Topics: 39
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The project is to start in 6 months time, and we will get the amount from Europe in 6 months.
The exchange rate given is of after 6 months time from today, so why isn’t a whole year’s inflation added to the rate instead of inflating it for just 6 months?
May 29, 2023 at 7:53 am #685281
John Moffat
Keymaster
- Topics: 57
- Replies: 54379
I am not sure that I understand your problem.
We are not inflating the exchange rate, and we are hedging for 6 months.
Therefore using forward rates we take the six month forward rate.
For money markets we use the current spot rate but account for interest for six months.
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