An Indian customer who has imported equipment from Germany for Euro 10mn has approached a...
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Finance
An Indian customer who has imported equipment from Germany for Euro 10mn has approached a bank for booking a forward EUR/INR contract. The delivery is expected somewhere during the 6th month from the date of booking. The following rates were being quoted:
| Spot - (Euro/ USD Spot) | 1.118/20 |
| 3 month forward | 10/12 |
| 6 month forward | 20/22 |
|
|
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| Spot - USD/INR | 66.40/2 |
| 3 month forward | 110/115 |
| 6 month forward | 215/225 |
Assuming the payment will be made on the day of receiving the equipment, what is the rate (EUR/INR) that the bank will quote to the customer for import payment? Bank may load profit margin of 5 paise. Please give your working in detail.
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