Academic MBA Question:
Question: A dealer has the following position in GBP against INR:
- Spot – GBP 20 million Long
- Three months forward – GBP 20 million short
- The spot was executed at an average rate of 100.50 and the forward rate was 100.75.
- The dealer now wants to close his position. If the prevailing swap quotes are as follows, what is the profit/loss in squaring off his position?
- GBP/INR Spot: 100.6510/100.6530
- 3-month Swap: 9135/9170 (10 Marks)