View the Currency presentation - ICICI Direct
View the Currency presentation - ICICI Direct
View the Currency presentation - ICICI Direct
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How is exchange rate a financial risk?<br />
• Mr. ABC is an exporter and has to receive USD 5 million as payment for his exported<br />
goods next month. If today USD-INR rate is 55.60, Mr. ABC is expecting to receive<br />
INR 27.8 Crs. (5*10^6*55.60 = 27.8 Cr).<br />
• By <strong>the</strong> time of payment delivery, if USD-INR moves to 57.30, Mr. ABC will receive<br />
INR 28.65 Cr. He will gain additional INR 0.85 Cr.<br />
• In a situation, USD-INR changes to 53.50 at <strong>the</strong> time of delivery, Mr. ABC will receive<br />
INR 26.75 Cr. A loss of INR 1.05 Cr.<br />
• In above situations, Mr. ABC will hugely gain or lose basis exchange rate<br />
movement in USD-INR, for which he has no control.
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