| Country : | Australia |
|---|
Assignment Task:
Task:
Question 1
The following wholesale exchange rates (per A$1) are taken from the Australian Financial Review of 2 October 2019 and relate to the rates observed on October 1, 2019.
Sell Buy
US dollar 0.6704 0.6707
Europe euro 0.6157 0.6161
UK pound 0.5449 0.5454
Switzerland franc 0.6698 0.6703
a) Create a table showing the bid and ask quotes of each of the currencies expressed in direct quote form for the Australian investor (4 marks)
b) How many Australian dollars do you need to purchase 100,000 Switzerland francs? (2 marks)
c) If the forward quotes in point form are as follows for US dollar, calculate the outright
forward rates
1 Month 7/8
3 Months 19/21
12 months 60/65
d) Calculate the forward premium (discount) based on the rates calculated in c) above.
e) Do the forward rates imply a strengthening or weakening of the Australian dollar with respect to the US dollar?
Answer:
a)
Currency Bid Ask
USD 1.4910 1.4916
EUR 1.6231 1.6242
GBP 1.8335 1.8352
CHF 1.4919 1.4930
b) BUY CHF 100,000 at ask price of 1.4930, therefore need AUD 149,300
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