oneboy

deriv108 Wrote:
-------------------------------------------------------
> "a contract expecting to receive a 100$ on his
> books, at the contracted rate of 0.8$/PIF."
>
> Does it mean that the importer has to pay 100$, or
> pay 125PIF but at a rate of 0.8$/PIF, or pay in
> PIF worth 100$?
>
> If yes, the exporter will receive 100$ or
> 111PIF=111PIF*.9$/PIF=100$. In USD, the exporter
> gets his 100$. It seems no exchange risk.

Over here since, the US exporter gets his $100 he faces no exchange rate risk. However the importer faces the risk.

In other words, the US exporter has no exposure at all IF he is getting the money in dollars



Edited 1 time(s). Last edit at Friday, April 1, 2011 at 01:49AM by idreesz.