FX Markets

Zero-cost strategies for European importers

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BACKGROUND: A European importer has a requirement to pay dollars in three months’ time for its purchased goods. The company policy is to hedge all its exposures, but payments of upfront premiums are not acceptable. The euro/dollar is currently trading at 1.2330, above their book rate of 1.2000. The euro has continued to appreciate against the dollar over the past three months and the importer would like to benefit further from this trend.

PROBLEM: While the importer would like to benefit

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