Question

If the Japan yen is 110.97 to US dollars. My company needs to make a 1...

If the Japan yen is 110.97 to US dollars.
My company needs to make a 1 million yen payment in six months. My company operates in US dollars. Help identify the spot and foward exchange
Rate between the two currencies? The amount of dollars you spend to acquire the amount of yen required ?
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Answer #1

The spot rate shall be the rate that is quoted today i.e. 110.97 yen per dollar

However I shall explain using curren or the forward rates at the time of posting this solution.

Kindly refer to the link for rates:

https://www.barchart.com/forex/quotes/%5EUSDJPY/forward-rates

Spot rate is 111.020
Forward rates are quoted as 1/10,000 th of the rates
We see 6 month rate as below:

USD/JPY 6-Month Forward

-156.900

-155.900

-156.400

07/09/18

Taking ask rate as we have to buy yen using dollars, the rate shall be = 111.020+(-155.900/10000)=111.0356 yen per dollar
For 1 million yen dollars required = 1,000,000/111.0356 =$9,006.12 in 6 months

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