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Asc gscusciscdscesc tscosc tschscesc asccscisc

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70 a.sc g.scu.sci.scd.sce.sc t.sco.sc t.sch.sce.sc a.scc.sci.sc d.sce.sca.scl.sci.scn.scg.sc c.sce.scr.sct.sci.scf.sci.scc.sca.sct.sce.sce.scx.sca.scm.scp.scl.sce.scA client concludes a time option forward contract in which, for the period between six and twelve months, he must purchase a total amount of EUR 50 million against a pre-determined rate.At the moment when the contract is concluded, the following FX forward rates for EUR/USD apply:Six month FX forward ask rate EUR/USD: 1.4590Twelve month FX forward ask rate EUR/USD: 1.4520The bank sets the contract rate at 1.4590.If, after twelve months, the client has only used the time option forward contract to purchase 40 million euro, he must now either perform a close out FX spot transac-tion in which he sells 10 million euro at spot against the applicable spot rate or he must conclude an FX swap in which he sells 10 million euro per spot and buys them back on a later date against the current FX forward rate.3.2.7 Offsetting FX forwards e.scx.sca.scm.scp.scl.sce.scA French company has concluded an import contract with an American supplier for a value of USD 2 million. The expected payment date is 10 October. In order to hedge the FX risk, the importer has concluded an FX forward contract with its bank in which he buys the US dollars against a EUR/USD forward rate of 1.5200. On 8 Sep-tember, the importer hears that the supplier has gone bankrupt and that the delivery will therefore not take place. The payment of USD 2 million on 10 October will there-fore also not take place.
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