Reference no: EM132557433
(a) You have been given following data of country X relating to the year 2015.
Item Rs.
Exports 1,453,176
Imports 2,535,163
Services receipts 731,863
Services payments 486,367
Net primary income (240,065)
Net secondary income 813,128
Financial account 252,409
(i) Comment on the country X's balance of payment position based on the trade and current account balance.
(ii) Exchange rates for the last 6 months of 2015, of the country X were Rs 98.50, 99.75, 99.85, 100.55, 101, 102.50. Identify the impact of exchange rate behavior on the balance of payments of country X.
(b) Consider a trader who buys a put option on Sterling pounds at a strike price of $ 1.4700, for a premium of $ 0.02. If exchange rates are 1.4378, 1.4458, 1.4500, 1.4682 and 1.4725. Calculate the gain or loss and state whether he will exercise the option or not.