26 December 2008
Mr.A Exported Goods to US at 1500$ as invoice value. He made Forward Contract for 1500$ @ Rs.40 Per Dollar. Mr.A Discout that Bill with bank. But the Bill Realised only for 1400$. In this case bank recover loss of 100$ short realisation from Mr.A in what Exchange rate ?
27 August 2010
Forward cover and bank charges are 2 different things:
Mr. A has taken a forward cover of $1500 @ 40/$ Mr. A is bound by this cover
If Mr. A has in effect only $1400, then he can give this to bank and receive $1400 @ 40 Rs. 56,000, irrespective of the exchange rate at that date (It could be 42 or 37) Now he is also bound to sell $1500 as per forward cover but could only sell $1400. The remaining $100, he will either have a profit (37) or loss (42) depending on what the exchange rate would be.
CAclubindia
