Omni Advisors, an international pension fund manager, plans to sell equities denominated in Swiss francs (CHF) and purchase an equivalent amount of equities denominated in South African rands (ZAR). Omni will realize net proceeds of 3 million CHF at the end of 30 days and wants to eliminate the risk that the ZAR will appreciate relative to the CHF during this 30-day period. The following exhibit shows current exchange rates between the ZAR, CHF, and the U.S. dollar (USD). Currency Exchange Rates Maturity Bid 6.2683 Spot 30-day 6.2540 90-day 6.2106 ZAR/USD Ask 6.2791 6.2643 6.2202 CHF/USD Cross-currency rate Current value of Omni's Swiss equity portfolio in ZAR Bid 1.5284 1.5228 1.5060 Ask 1.5346 1.5287 1.5117 Calculate the following: • The CHF/ZAR cross-currency rate Omni would use in valuing the Swiss equity portfolio. (Round your answer to 9 decimal places.) • The current value of Omni's Swiss equity portfolio in ZAR. (Round your answer to 2 decimal places.) • The annualized forward premium or discount at which the ZAR is trading versus the CHF. (Negative amount should be indicated by a minus sign. Round your answer to 2 decimal places.) 0.244435561 %

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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.