Yes, if he buys SF now, he would lose interest on the euro (which is higher as implied by the forward contract). So, then he didn’t really benefit from the forward contract in this example, sinc the spot rae turned out to be SF 1.5101! It is clear that this is better than waiting 3 moths and then paying the spot rate, but what isn’t clear is whether buying SF today would have resulted in the same outcome as the forward contract. |