Currency Forward Contracts currency, understand, interest, mkt

segalm

I am having a hard time with these types of FRA. I understand the convered interest arbitrage and which currency should be sold or bought but the steps are hard to follow. I don't follow step 2, can someone please help explain?

1) If fwd price is higher and you sell at mkt price
2) buy 1/(1+rf)^T units of foreign ccy
3) hold position and earn interest
4) at maturity deliver the ccy and get paid the fwd price