How to use forward rate today to lock in a foreign exchange


Problem:

Here are the rates to use: On January 1, the daily spot rate is 3.13 MYR, and the forward rate is 0.317 U.S. dollars/MYR for April 1st of the same year. On April 1, the daily spot rate is 3.52 MYR. On January 1st, the company uses that day's forward rate today to lock in a foreign exchange rate for its expected 1.25 million MYR in sales. This means the company agreed to exchange 1.25 million MYR using the forward rate on January 1st when April 1 arrives. Explain and show calculations

 

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