A New Zealand business imports goods from Canada and is concerned about the appreciating value of the Canadian dollar because all its invoices are denominated in that currency. The company has approached its bank about managing this risk on one very large invoice and has been offered a one-year Forward Exchange Contract. The business’s manager has asked you to check that the forward foreign exchange rate in the contract is appropriate. Using the following information calculate an appropriate forward rate for the contract. The spot rate is NZ$1.00/CAN$0.82. The Canadian risk free rate is 3% while the New Zealand risk free rate is 2%
