Katfab Ltd., is facing the problem with respect to management of overseas transactions, which are denominated in the US $. The finance executive of Katfab Ltd. approached the banker, to deal with the transactions, and th

CS Professional · Financial, Treasury and Forex Management · PYQS · December 2019
Katfab Ltd., is facing the problem with respect to management of overseas transactions, which are denominated in the US $. The finance executive of Katfab Ltd. approached the banker, to deal with the transactions, and the following information was provided by the banker : Spot rate: ₹/US$ 66.00 - 25 Forward rate, applicable for end of three months from now: ₹/US$ 67.00 - 50 From the above information, you are required to answer the following questions: (iv) How much in terms of Indian Rupees would be needed, to fulfil the immediate remittance, of US $ 2,20,000 ?

Answer & Explanation:

(iv) Indian Rupees needed for immediate remittance of US$ 2,20,000 Amount to be remitted in US$ = US$ 2,20,000 Relevant rate for converting US$ to ₹ for an immediate remittance (buying foreign currency) is the Spot Ask Rate. Spot Ask Rate = ₹66.25 per US$ Rupees needed = Amount in US$ * Spot Ask Rate Rupees needed = US$ 2,20,000 * ₹66.25 Rupees needed = ₹1,45,75,000

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