Forex Margin

AFM

Hi, in illustration 86 why do we not deduct margin on first working of customer for initial contract?

Lalit Sanpal

CA Final

★ 6K+

12-May-23 12:47

646

Answers (1)

only if the contract rates are given as spot / forward quotation do we add/subtract margin - else it is assumed that margin is already included in the value. The exact language used in the question is " entered into a forward purchase contract for.... on ... with customer for 3 months @ rate of ₹ 59.60" - here the contract rate is already provided and hence we cannot add margin. Say the question says the forward rate quoted in the market is is ₹ 59.6 - bank enters into contract with customer at this rate - then you can add / subtract margin

Sriram Somayajula

Admin

13-May-23 10:11