If you purchase New Zealand Dollar (NZD) 50,000 of supplies from New Zealand how
ID: 2785087 • Letter: I
Question
If you purchase New Zealand Dollar (NZD) 50,000 of supplies from New Zealand how much will this cost in US$ today?
34665.60
.In the above problem what can you do if you do not have to pay for 30 days and you wanted to hedge your position?
What will it cost in US$ if this is the case?
Forward Rates for US $ per New Zealand Dollar (NZD)
30 day forward
US$0.8391 / NZD
60 day forward
US$0.8302 / NZD
90 day forward
US$0.8299 / NZD
Forward Rates for US $ per New Zealand Dollar (NZD)
30 day forward
US$0.8391 / NZD
60 day forward
US$0.8302 / NZD
90 day forward
US$0.8299 / NZD
Explanation / Answer
One can enter a 3 day forward contract to buy $50,000 worth of newzealand dollars for US dollars
The effective value shall be:
50,000*0.8391
=$41,955
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