An Indian software exporter, 'Indi-Tech', signs a 10 million USD contract with a US client to be delivered in six months. The current spot rate is 83.50 INR/USD. The firm considers two options: (A) Stay unhedged and take the spot rate in six months, or (B) Enter a forward contract at 84.20 INR/USD. Six months later, the Rupee appreciates to 81.00 INR/USD. Compare the financial outcomes of hedging versus remaining unhedged.

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Economics · Foreign Exchange and Risk Management

Verified Solution4 OptionsUpdated: October 2026👁️1 View

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Correct answer

Hedging saved the company 3.2 crore rupees.

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Answer 1

Hedging saved the company 32 lakh rupees.

Answer 2

Hedging saved the company 2.5 crore rupees.

Answer 3

Staying unhedged would have been better by 2.5 crore rupees.

Answer 4

Hedging saved the company 3.2 crore rupees.

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