21-Mr. Ali is an Omani exporter and expected to receive 200 million INR after 30 days from its Indian importer. Mr. Ali expects that the INR may depreciate by the time of receiving. To protect from this risk of losing local currency at the time of exchange on maturity, Mr. Ali enters into the currency forward agreement with Bank Muscat. The forward price agreed between them at INR 200/OMR. After 30 days, assume, the exchange rate is INR 125/OMR in the open market. Which one of the following is the gain/loss from the forward contract to Mr. Ali? a. Ali gaining OMR 1,600,000 due currency forward contract b. Ali losing OMR 2,000,000 due currency forward contract c. None of the options d. Ali gaining OMR 1,000,000 due currency forward contrac

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.