Calculate the Amount of Dollars Received for Chinese Yuan

How much dollars will you receive for the 5,000,000 yuan 60 days from now?

Based on the data provided, you have the option to hedge your position by selling Chinese Yuan forward. The current spot rate of the yuan is $0.069, while the forward rate is $0.074. You expect the spot rate in 60 days to be $0.066.

When calculating the amount of dollars you will receive for the 5,000,000 Chinese Yuan in 60 days, it is important to consider the spot rate, forward rate, and the expected spot rate.

Given:

Amount to be received: 5,000,000 Chinese Yuan

Spot rate: $0.069

Forward rate: $0.074

Expected spot rate: $0.066

To hedge your position, you can sell Chinese Yuan forward by entering into a forward contract to sell Chinese Yuan at a predetermined exchange rate in the future.

The formula to calculate the amount of dollars you will receive is:

Amount in dollars = Amount in Chinese Yuan * Forward rate

Therefore, with 5,000,000 Chinese Yuan, the calculation would be:

Amount in dollars = 5,000,000 * $0.074

Amount in dollars = $370,000

So, if you decide to sell the 5,000,000 Chinese Yuan forward at the forward rate of $0.074, you will receive $370,000.

However, if you wait and convert the 5,000,000 Chinese Yuan at the expected spot rate of $0.066, you would receive a different amount.