A) What is the spot exchange rate for the US dollar on Monday, 14th , 2007 vis-à-vis the yen ? What are the 30-day, 60 and 90-day forward exchanges rates?
b) Is the Japanese yen at a forward premium or forward discount relative to the US dollar?
c) What was the spot rate on March 14, 2006 (exactly one year ago). Comparing that to the current quote ,has the Japanese dollar appreciated or depreciated?
d) If you expect to be paid 100 million yen by a Japanese buyer in 90 days, is there any simple way to hedge the risk arising from this future payment based on the data you have seen so far?
Use wall street journal or the financial times, and the pacific exchange rate service at http://fx.sauder,ubc.ca/
The response addresses the queries posted in 767 words with references.
// In order to start with such a paper, we should be familiar with the concept of 'Exchange Rate'. Firstly, we would find the spot exchange rate for the US dollar on Monday, 14th, 2007 vis-à-vis the 'yen' as per the requirement, which can be easily obtained through internet. On the basis of the spot exchange rate for the US dollar on Monday, 14th , 2007 vis-à-vis the 'yen' we would discuss the 30-day, 60 and 90-day forward exchanges rates.//
US Dollar and Japanese Yen
The spot exchange rate as on Wednesday, 14th May, 2007 of Japanese Yen vis-à-vis the US Dollar was 120.35 JPY per USD and as on 14th March, 2007 was 116.376 JPY per USD. The spot exchange rate latest as on 16th November, 2007 is 111.05 Japanese Yen per US Dollar. (Pacific Exchange Rate Service, 2007)
Note: Since the rate asked in the question is for Monday, 14th, 2007, the only Monday in 2007 comes in May while the 14th March, 2007 is a Wednesday. So, the rates for both the days, 14th March, 2007 and 14th May, 2007 are given.
The forward exchange rate for 30 day forward contract as in November, 2007 is 110.67 for bid (to buy) 110.718 for ask (to sell), ...
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