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Debenture Titled: Mayan Calendars center of earth Jewish Keep.
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Accounts irretrievable with accumulated depreciation.
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The essentials of the Maya calendar are based upon a system which had been in common use throughout the region, dating back to at least the 5th century BC. It shares many aspects with calendars employed by other earlier Mesoamerican civilizations,
Provision on providence for Under belling weights and Tonnage: Advanced Language, Trigonometry, astronomy, biosphere advanced knowledge among others, still to date we are unable to replace the experience and supreme advanced scientific understandings and understanding of such accurate an and suspending long enduring return on uses and that even to date are we unable to duplicate andor replace thisof that has been lost this to time and not only this stars time and ours but littertly our inner beings how an culture so advanced that their leader littlely lived longer, came from Egypt and settled south of Anu and then from many kings through is said to of rise again in a home made built space craft this to the stars and having even been seen again this till not and then as promised at the date
Equations
Elements of Financial Statements
ownership right of the stockholders
of the entity
in the asset that remain after deducting the liabilities
equity as the market of the value of the car or house less the loan or mortgage balance.
Suppliers exist because Merchants sent suppliers to
Supply merchandise on account, having established this over and over for 300
| Site | Location | Description | Photo |
|---|---|---|---|
| Aguada Fénix | Tabasco, Mexico | Aguada Fenix is the oldest Mayan city discovered to date, since it was built in 1,000 BC. It was built with earth platforms, something unusual in Mayan architecture. Its main platform measures 3.8 million cubic meters and is the largest ancient monument in the world. Four offerings have been found, and a burial of an individual, and 21 ceremonial centers have been discovered, all facing north–south and in rectangular shape | |
| El Baúl | Escuintla Department, Guatemala | El Baúl, along with the sites of Bilbao and El Castillo, forms the Cotzumalhuapa Nuclear Zone, a large urban area dating to the Late Classic period. | |
| Becan | Campeche, Mexico | Becan was a major city in the Yucatán Peninsula. It was occupied from about 550 BC, in the Middle Preclassic period and was inhabited through the entire Classic Period, finally being abandoned around the 9th century AD. The site had contact with Teotihuacan in the Early Classic and was fortified with a moat and ramparts.[3] | |
| Bonampak | Chiapas, Mexico | Bonampak was a Maya state of the Classic Period in the Usumacinta basin, a complex political region where the city faced wars against other major Maya powers like Yaxchilán. The fame of Bonampak comes from the Temple of the Murals which hosts a complete room painted with unique mural paintings showing scenes of ceremony, war and human sacrifice. | |
| Calakmul (Ox Te’ Tuun; Chiik Naab’) |
Campeche, Mexico | Calakmul was one of the two most important Maya cities in the Classic Period, when its rivalry with Tikal dominated the Maya political landscape. The city was already an important city in the Late Preclassic, with dated monuments being erected up to the beginning of the 10th century AD.[4] | |
| Caracol | Cayo District, Belize | Caracol was an important lowland Maya city, it was already settled in the Late Preclassic but reached its maximum power in the Classic Period when it was first allied with Tikal and later with Calakmul. It played an important role in the downfall of Tikal in the Early Classic and underwent a dramatic expansion in the Late Classic.[5] | |
| El Ceibal (also known as Seibal) | Petén Department, Guatemala | Seibal was the largest Classic Period city in the Pasión River region, situated on bluffs overlooking the river. The city experienced a Late Preclassic apogee before declining in the Early Classic and falling under the domination of Dos Pilas in the Late Classic. It survived the collapse of that kingdom to become one of the last cities to survive in the area and was abandoned at the end of the Classic Period.[6] | |
| Chichen Itza (Uuc Yabnal) |
Yucatán, Mexico | Chichen Itza was one of the largest Maya cities and was a major focal point in the northern Maya lowlands from the Late Classic through to the Early Postclassic period and that demonstrated a variety of Maya and non-Maya architectural styles.[7] | |
| Chunchucmil | Yucatán, Mexico | Chunchucmil was a large site that reached its apogee during the Late to Terminal Classic. The organisation of the city appears to have differed from that of other Maya sites and appears to have been geared towards a specialised coastal trade in salt.[8] | |
| Coba | Quintana Roo, Mexico | Coba is large site situated among five small lakes on a dry plain. The site is known for a network of 16 causeways linking it to neighbouring sites, the longest of which runs over 100 kilometres (62 mi) west to Yaxuna. The main phase of occupation of the city dates to the Late Classic through to the Early Postclassic, from about AD 700 to 1100.[9] | |
| Comalcalco (Joy Chan) |
Tabasco, Mexico | Comalcalco is a city of the Classic period. It is the only Mayan city built with bricks made of clay and glued with stucco. Three tombs and 14 funerary burials have been found, of which 7 were inside ceramic urn, as well as a pantheon discovered on the outskirts of the city with 116 burials, unique in the Mayan culture. | |
| Copán (Oxwitik) |
Copán Department, Honduras | Copán was the capital city of a major Classic period kingdom from the 5th to 9th centuries AD, when it was closely allied with Tikal. The city was located in the extreme southeast of the Mesoamerican cultural region, on the frontier with the Isthmo-Colombian cultural region, and was almost surrounded by non-Maya peoples. The city is best known for its elaborate sculptural style.[10] | |
| Dos Pilas (Mutal) |
Petén Department, Guatemala | Dos Pilas dates to the Late Classic Period, being founded by an offshoot of the Tikal dynasty in order to control trade routes in the Petexbatún region. It broke away from Tikal and became a vassal of Calakmul. It was a predator state from the beginning and the city gives an important glimpse into the great rivalries and political strife that characterised the Late Classic. Much of the history of Dos Pilas can now be reconstructed, with a level of detail that is almost unparalleled in the Maya area.[11] | |
| Dzibanche | Quintana Roo, Mexico | Dzibanche was a major Maya city in southern Quintana Roo with monumental structures and the first capital of the Kaan Dynasty, a powerful linage that conquered and dominated a large territory of the central Mayan lowlands during the Mesoamerican Classic period. The Kaan originated in Dzibanché and later moved their capital to Calakmul, but the city remained as a major power of the Kaan dynasty. | |
| Dzibilchaltun (Ich Kaan Ti’Ho) | Yucatán, Mexico | Dzibilchaltun was a large and important city in the far north of the Yucatán Peninsula, with its principal architecture dating to the Classic Period, although activity at the site continued into the Late Postclassic when the city’s main temple was already in ruins.[12] | |
| Iximche (Iximche) |
Chimaltenango Department, Guatemala | Although short-lived, Iximche was the capital of the Kaqchikel highland kingdom at the time of the Spanish conquest of Guatemala and became the base of operations for the conquest of the highlands and Pacific coast until Spanish demands for tribute caused the Kaqchikels to break off their alliance and rebel. The Spanish then burned Iximche and moved their capital to nearby Tecpán Guatemala until frequent Kaqchikel raids forced them to move their colonial capital to what is now Ciudad Vieja near Antigua Guatemala. | |
| Ixkun | Petén Department, Guatemala | Ixkun is a large site containing many unrestored mounds and ruins and is the best known archaeological site within the municipality of Dolores.[13] It was the capital of one of the four largest kingdoms in the upper Mopan Valley.[14] Stela 1 at Ixkun is one of the tallest stone monuments in the entire Petén Basin.[15] Although the main period of activity was during the Late Classic Period, the site was occupied from the Late Preclassic right through to the Postclassic Period. | |
| Kaminaljuyu (Kaminaljuyu) |
Guatemala Department, Guatemala | Kaminaljuyu was founded in the Middle Preclassic and emerged as an important city in the Late Preclassic and dominated the entire Maya Highlands. It declined at the end of the Preclassic and was taken over by a new Maya group in the Early Classic with strong contacts with central Mexico. Occupation at Kaminaljuyu extended into the Late Classic.[16] | |
| Mayapan | Yucatán, Mexico | Mayapan was an important fortified city with a densely occupied area within the city walls. The principal pyramid at Mayapan was modelled after the main pyramid at Chichen Itza. The city was the most important site in Yucatán for a period of about 250 years during the Postclassic Period, with the earliest structures dating to the 12th century AD.[17] | |
| El Mirador | Petén Department, Guatemala | El Mirador was an enormous Late Preclassic city although construction apparently began in the Middle Preclassic and some level of occupation continued into the Classic Period. The city included some very large triadic pyramids and covered an area similar to that of Classic Period Tikal.[18] | |
| Moral Reforma | Tabasco, Mexico | Moral Reforma was an important river port that controlled commercial traffic on the San Pedro Mártir River between El Petén and the Gulf of Mexico coast. Because of this, it was highly coveted and fought wars with Calakmul, Tikal, Palenque and Piedras Negras, by whom it was dominated at different times. It had a long occupation, since the year 300 BC. C. until its abandonment in the year 1000 d. C. | |
| Naachtun (Masuul) |
Petén Department, Guatemala | Naachtun is situated in the extreme north of Petén, in a central location between Tikal and Calakmul, the two great Classic Period Maya powers, both of which constantly influenced its politics. The hieroglyphic texts from the site cover almost the whole Classic Period from 504 to 761 AD, although the site inhabited since the Preclassic.[19] | |
| Nakbe | Petén Department, Guatemala | Nakbe was an important city in the Middle Preclassic, with its principal phase of occupation lasting from about 1000 BC to 400 BC. The city is linked to neighbouring El Mirador by a Late Preclassic causeway. Nakbe appears to possess the earliest examples of Maya masonry architecture and of sacbe causeways.[20] | |
| Naranjo (Wak Kab’nal) |
Petén Department, Guatemala | Naranjo was the capital of a kingdom from the Early Classic through to the Late Classic and formed an important link in the trade routes running from the great city of Tikal to the Caribbean Sea. The earliest dated monuments at the site date to the late 5th century AD. The city became a vassal of Tikal’s great rival Calakmul and was involved in a series of devastating wars.[21] | |
| Oxkintok | Yucatán, Mexico | Oxkintok was one of the first Maya states to develop in the northern lowlands, undergoing a process of rapid development in the Early Classic Period that gave rise to an important capital with inscribed stone monuments. The earliest dated monument dates to the late 5th century AD.[22] | |
| Palenque (Lakamha’) |
Chiapas, Mexico | Palenque is located in the foothills of the Chiapas highlands. The city became dominant over the western Maya lowlands during the Late Classic, and engaged in hostilities with its neighbour Toniná that eventually eclipsed it. Hieroglyphic inscriptions at Palenque document a dynastic sequence stretching from the 5th century AD through to the end of the 8th century. The site is best known for the Temple of the Inscriptions, the mortuary shrine containing the tomb of king Kʼinich Janaabʼ Pakal.[23] | |
| El Peru (Waka’) |
Petén Department, Guatemala | El Perú was a major Classic Period ally of Calakmul in its wars against Tikal.[24] | |
| Piedras Negras (Yo’k’ib’) |
Petén Department, Guatemala | Piedras Negras was the largest city in the region of the Usumacinta River and is known for its excellent quality Late Classic sculpted monuments. These well preserved inscriptions provided the first evidence that Maya texts described historical events. The site has a continuous series of texts running from the 7th century AD through to the 9th century.[25] | |
| Quiriguá | Izabal Department, Guatemala | Quiriguá is a relatively small site that was founded by Tikal in the Early Classic in order to control the Motagua River trade route, important for the transport of jade and obsidian. Originally a vassal of Copán, the city rebelled and allied itself with Calakmul, after which it erected elaborate monuments in a style similar to that of its former overlord.[26] | |
| Qʼumarkaj | Quiché Department, Guatemala | Qʼumarkaj (also known as Utatlán) was the Postclassic capital of the Kʼicheʼ Kingdom of Qʼumarkaj at the time of the Spanish Conquest and was one of the most powerful Maya cities at that time, dominating the Guatemalan Highlands.[27] | |
| San Bartolo | Petén Department, Guatemala | San Bartolo is a remote site in the Guatemalan rainforest and was only discovered in 2001. Most of the structures at the site date to the Late Preclassic and overlie older Middle Preclassic architecture, although the city was reoccupied in the Late Classic. San Bartolo possesses one of the most important Preclassic murals yet found.[28] | |
| Tikal (Yax Mutal) |
Petén Department, Guatemala | Tikal was founded in the Late Preclassic but reached its greatest power in the Late Classic, when most of its great temples were constructed. The site was one of the most powerful kingdoms in Maya history and possesses a dynastic chronology that extends from about AD 100 through to the 9th century. A long-running rivalry between Tikal and Calakmul began in the 6th century, with each of the two cities forming its own network of mutually hostile alliances arrayed against each other in what has been likened to a long-running war between two Maya superpowers.[29] | |
| Toniná | Chiapas, Mexico | Toniná was a major Maya power during the Classic period located in the far regions between the Lowlands and the Highlands where it developed as a huge city-state with a major political and military power, facing wars and victories against other Maya sites, it also had the control of a large commercial route along the Maya region to the Gulf of Mexico. The great pyramid of Toniná with over 75 meters stands as the tallest Maya building and one of the tallest ancient pyramids of the world.[30] | |
| Tulum (Zama?) |
Quintana Roo, Mexico | Tulum is a Late Postclassic site situated on cliffs overlooking the Caribbean Sea and was probably occupied at the time of the Spanish Conquest. It is a small site with architecture in a style similar to that at the bigger cities of Chichen Itza and Mayapan. The site was probably founded to expand the coastal trade routes of the Yucatán Peninsula.[31] | |
| Uxmal | Yucatán, Mexico | Uxmal was an important capital in the western Yucatán region, demonstrating architecture in the Puuc Maya style. The site reached its apogee in the Late to Terminal Classic from about AD 800–1000 and appears to have declined at the beginning of the Postclassic Period, although the exact length of occupation of the city is unknown.[32] | |
| Yaxchilan (Pa’ Chan) |
Chiapas, Mexico Capital: Tuxtla Gutiérrez Area: 28,306 mi² Airport code: TAP HDI: 0.697 medium Ranked 32nd of 32 Highest elevation (Volcán Tacaná): 4,080 m (13,390 ft) ISO 3166 code: MX-CHP Municipalities: 124 Import |
In the Late Classic Period Yaxchilan was one of the most powerful Maya cities along the course of the Usumacinta, with Piedras Negras as its major rival.[33] Architectural styles in subordinate sites in the Usumacinta region demonstrate clear differences that mark a clear boundary between the two kingdoms.[33] Yaxchilan was a large center, important throughout the Classic era, and the dominant power of the Usumacinta River area. It dominated such smaller sites as Bonampak.[34] The site is particularly known for its well-preserved sculptured stone lintels set above the doorways of the main structures.[35] | |
| Yaxha (Yaxha) |
Petén Department, Guatemala | Yaxha was a large city located upon the north shore of the lake of the same name. The city reached its maximum power in the Early Classic, when it was one of the largest capital cities in the Maya region; it was apparently allied with Tikal at that time. By the Late Classic its power had waned, perhaps linked to defeat by Calakmul or its allies.[36] |
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Andrés Manuel López Obrador Securities
collections and on Sheinbaum this to Mayan Calendar
| Andrés Manuel López Obrador | |
|---|---|
| López Obrador in 2024 | |
| 65th President of Mexico | |
| In office 1 December 2018 – 30 September 2024 | |
| Preceded by | Enrique Peña Nieto |
By the President: Donald J Trump
By………, Secretary: J.D Vance
……………… recorder of the General Land Office.
Andrés Manuel López Obrador
By the President: Phoebe A Gates
By………, Secretary: Donald D Needham
……………… recorder of the General Land Office.
Tenure
Security
Mexico
Payable Accounts
Products
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Acquirer
Entered date
Billing
Sender
Andrés Manuel López Obrador
tenure
Mason Country county Town Hall markets
Soonest ship date:
Security
By the President: Nick Aurgio
By………, Secretary: K Harris
……………… recorder of the General Land Office.
ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING PRINCIPLES DO NOT PURPORT TO SHOW THE CURRENT MARKET VALUE OF THE ENTIRETY ASSETS. EXCEPT A FEW RESTRICTED AREAS.
Assets – Liabilities = Stockholders equity
Net Assets = Stockholders equity
……………… recorder of the General Land Office. Merchant Counter Cashiers return Desk #821829 ……………….
Statement of affairs and accounting concepts
De Affairs Do Rangers
Emanuel Di savoy.
Money market – One Month Monthly
Uro Rate 7%
uropound rate 10%
foreign exchange Market
Spot rate $24000
one month swap rate $0.00060
discount on pound against dollar
one month forward rate to customer
Date Transaction Currency
Day 1 Purchase of pounds against dollar value date day 31
(to server a customer)………………………….. NFC ………..NFC
State of pounds against dollars in spot market ……-10000….-24000
(to square exchange position overnight……….-10000 ….-24000
net cash flows
Day 30 Purchase of pounds against the dollars from day 1 contract
(to serve customer) ……………………………………………………………………………………………. +1,0000 …..- 2,3930
…………………………………………………………………………………………………………………………………+1,0000 …..- 2,3930
Net Cash flows
…………………………………………………………………………………………………………………………………. 0 ……………..+ 0.0070
Net Exchange Positions
Cash Flows Required to close swap position (mismatched Cash Flows)
Created above:
Day 1 Requested cash flow ……………………………….+1.0000………-2.4000
days 30 Requested cash flows ………………………….- 1.0000……….+2,3930
The Engineered swap transaction (the spot sale of pounds) eliminated
the risk of having a net overbought position in pounds overnight. Now our traders profits are unaffected by any change in the spot rate of the
pound.
Exhibit 8.9 shows that our trader has switched a net exchange position
in a swap position. She is no longer vulnerable to movements in the spot
rate for pounds against dollars.
the traders profits can now be affected only by the change in interest rate differentials and the corresponding change in the swap rate. Overnight interest rate differentials usually move less drastically than spot exchange rates; thus the engineered swap position is a lesser overbought risk that a net exchange position
US dollar
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the said manor (in consideration of the sum of £ to the said A B paid by the said C D) (or as the case may be)
And thereupon to the same Court came the said C D.
and took of the Lord of the said Manor by the hands of
his Steward the said Cottage aforesaid witli the appurtenances To hold the same to him his heirs and assigns for ever according to the Custom of the said Manor Paying the Rents and performing the Ser-ices of
Right due and accustomed
and having paid the Lord
for his Fine as in the margin
and done his fealty is there-
upon admitted tenant by
pledges of E F and G H.
J. K., Steward.
EXHIBIT 8.12
IMPACT OF COVERED FORWARD TRANSACTIONS ON LOCAL
CURRENCY CASH POSITIONS
Forward Purchases of Dollars Create Local Currency
Forward Sales of Dollars Absorb Local Currency
Thus, where a forward exchange market does not exist and where the local money market is not fully developed, the trader will be making decisions constantly about loans and deposits in the local currency. We can think of the purchase of forward dollars as a source of loanable funds in the local currency-a “printing press” for local currency. On the other hand, the sale of forward dollars will produce a demand for local funds-a “vacuum cleaner” absorbing local currency. (See Exhibit 8.12.) For a foreign bank operating in the given local currency, the “printing- press” effect is highly desirable; however, the “vacuum-cleaner” effect is unwanted. The bank would most likely prefer to lend the local cur- rency instead of just exchanging it for dollars in the spot market. But the foreign bank also wants to be known as a foreign exchange trader who stands willing to both buy and sell in the exchange markets.
The possibility for operating in the forward market without absorbing needed local funds may be available in some currencies where the forward market is not absent altogether-although it may be very nar- row. If we could find a way to eliminate the initial forward exchange position in the forward market, instead of the spot market, we could accomplish our exposure objectives without having to use needed local funds for this purpose. As an illustration, assume the earlier example in
quotes for forward rates computed above.
Of course, if we want to make a profit we can add a small spread to the
This case shows once more the relationship between the foreign on the basis of the spot exchange rate and the interest rates for the two exchange market and the money markets. Forward rates can be quoted currencies involved. More specifically, in a quote expressed in Mexican terms in which we deal at other people’s rates, the forward rates can
be calculated as follows:
- The bid forward rate is a function of
a. The market’s bid rate for spot dollars b. The market’s offer interest rate for dollars c. The market’s bid interest rate for pesos - The offer forward rate is a function of a. The market’s offer rate for spot dollars b. The market’s bid interest rate for dollars c. The market’s offer interest rate for pesos
In practice, the spot rates and the rates at which funds can be placed or borrowed in the Eurodollar market can be estimated by just looking at the latest quotes in the market. However, to estimate the rates at which funds are placed or borrowed in the local market requires some further attention. Because of the nature of the money markets in curren- cies where no forward market exists, a deep interbank market is usually not readily available in these currencies. Thus, the trader who is generat- ing funds in local currency must think carefully about the rate at which the bank is willing to lend those funds. For the same reason, the trader who requires borrowings in the local currency must think carefully about the rate which the bank would be willing to pay for deposits in the local currency.
IMPACT ON LOCAL FUNDS AVAILABILITY
We have seen that the trader who engages in purchasing forward dol- lars against local currency (pesos) will be generating funds in local currency. This is the result of the spot sale of dollars (purchase of local currency) required to cover the forward transaction. Likewise, the trader engaging in sales of forward dollars against local currency will need to borrow funds in the local currency. This is the result of the spot purchase of dollars (sale of local currency) required to cover the for-
ward transaction.
176 THE TREAS
doing the opposite in the spot market, the net exchange posi- price, a net outright forward position will be created. By tion is brought down to zero, and, instead, a swap position
is created.
- Square the cash-flow position (swap position) created by the spot transaction by using the money market (that is, borrow- ing the currency sold spot, investing the currency purchased spot) for a maturity to match the value date of the forward
transaction.
money - Compute the interest differential resulting from the two market transactions and convert it into a swap rate. 4. Obtain the desired forward quote by adding or subtracting the swap rate from the spot rate used in the initial spot
transaction.
To determine the three-month forward bid rate of dollars against Mexican pesos, using Mexican terms and assuming we deal at other people’s rates, we follow the steps indicated above: - We want a quote that gives the rate at which we are willing to buy forward dollars against pesos. Doing the opposite in the spot market means selling dollars against pesos. Since we are dealing at other people’s rates, this is done at the rate at which the market purchases dollars against pesos- Mex$12.4900/$.
- Now we have an outflow in dollars and an inflow in pesos spot. To square the cash-flow position, we do the following: (1) borrow dollars at 7.25 percent for three months and (2) invest pesos at 10 percent for three months. Again, we use the market’s rates.
- The money market transactions produce an interest gain of 2.75 percent per annum. To convert this to a three-month swap rate, we use the spot rate from the initial spot transac- tion, Mex$12.4900/$. The 2.75 percent per annum on the rate Mex $12.4900 equals Mex$0.3435/$, which is the one-year swap rate. Therefore, the three-month swap rate is equal to Mex$0.0859/$ (0.3435 X 3/12). It is a premium on the dollar against the peso because it indicates how much we can afford
to lose in the forward purchase of dollars against pesos with-
out having a net loss.2
- Therefore, the three-month forward bid rate is equal to Mex$12.5759/$ (12.4900+ 0.0859).
The cash flows in Exhibit 8.11 show that if we follow the steps just described and a transaction is closed at the estimated bid rate, roughly, the net exchange position is zero at all times and profits equal zero. The small balances shown at the bottom of Exhibit 8.11 represent the inter- est paid and received. At the spot rate of Mex$12.4900/$, these balances approximately equal one another.
What is the three-month forward offer rate of dollars against pesos? We follow the same steps as above: - The forward quote requires the rate at which the trader is willing to sell forward dollars against pesos. Doing the oppo- site in the spot market means purchasing dollars against pesos. The market spot rate for this transaction is Mex$12.4915/$, the rate at which the market is willing to sell dollars against pesos.
- The spot transaction has created an inflow of dollars and an outflow of pesos. To square the cash-flow position, we (1) invest dollars at 7 percent for three months and (2) borrow pesos at 12 percent for three months. These are the market’s rates.
- The money market transactions produce an interest loss of 5 percent per annum. To convert this to a three-month swap rate, we use the spot rate used in the initial spot transaction, Mex$12.4915/$. The 5 percent per annum on 12.4915 equals Mex$0.6246/$, which is the one-year swap rate. Therefore, the three-month swap rate is Mex$0.1561/$ (0.6246 × 9/12). This is a premium; it indicates the minimum profit that must be obtained in the forward sale of dollars against pesos to compensate for the interest loss.
- Therefore, the three-month forward offer rate is equal to Mex$12.6476/$ (12.4915 + 0.1561).
“We know, in any event, that the dollar must have a premium against the peso because
the dollar has the lower interest rate. See also Exhibit 3.7.
EXHIBIT 8.11
CREATING A FORWARD EXCHANGE MARKET
RATE SCENARIO
Money Market, Three-Month Maturity
U.S. dollar
Mexican peso
Foreign Exchange Market
Spot rate
Three-Month Forward Rate to Customer
Bid
Offer
7.00%
7.25%
10.00%
12.00%
Mex$12.4900/US$ Mex$12.4915/US$
Mex$12.5759/US$
CASH FLOWS
Currency*
Date
Transaction
Mex$
US$
Day 1
Sale of pesos against dollars value date day 90 ((to serve customer)
NCF
NCF
Borrowed funds received (at 7.25%)
- 1.00
Sale of dollars against pesos in spot market - 12.49
- 1.00
Investment made (at 10%)
12.49
Net cash flows
0
0
Day 90
Sale of pesos against dollars from day 1 contract (to serve customer) - 12.5759
- 1.0000
Investment principal received - 12.4900
Investment interest received - 0.3122
Borrowed funds principal repayment - 1.0000
Borrowed funds interest paid
-0.0181
0.0181
Net cash flows
Net exchange positions
*+ = cash inflow;
= cash outflow; NCF = no cash flow. - 0.2263
- 0.2263
- 0.0181
Creating a Forward Exchange Market
The creation of a forward exchange market can be a major business goal per se, or it may be a necessity generated by the desire to service a customer in a market where a forward exchange market does not exist. In any event, this situation appears often in the case of currencies with very thin exchange markets, currencies which are not traded ac-
tively.
GIVING A QUOTE
To find what the quote for forward rates should be in the absence of a forward exchange market, the funds manager can use the money market rates for the two currencies involved. We know that the forward market should reflect the net accessible interest differential between the two currencies.
Let’s assume we have received a request for a quote of forward rates in a currency where a forward market does not exist at the time, say, the Mexican peso. The rate scenario is presented in Exhibit 8.11. A trader who is asked to quote forward rates must be willing to deal at the quoted rates. Our assumption is that the trader does not wish to assume a net exchange position. Therefore, if a transaction takes place at the quoted prices, the trader will want to get out of the outright forward net exchange position, as in the situation described in the preceding subsection “Getting Out of an Exchange Position.” Knowing the steps which the trader must take to get out of the outright forward position, we can estimate the costs or earnings involved in closing that position. These costs or earnings can then be used to calculate the forward rate.
In the previous case, we saw that to get out of an outright forward position, a swap position is created by dealing in the spot market after the net forward position develops. Then, to square the cash flows in the swap position, we could act in either the foreign exchange market or the money market. Since, in this case, there is not a forward market in existence, we are forced to use the money market to square the cash- flow position.
More specifically, the steps to estimate the rates which the trader would be willing to quote in the forward market are these:
- Do in the spot market the opposite of what is done in the forward market. If a transaction takes place at the quoted
EX
CHANGES IN QUOTES TO ACHIEVE DESIRED OBJECTIVES
Before
ONE-MONTH £
After
9.90%-10.10%
9.95%-10.15%
ONE-MONTH $
6.90%-7.10%
6.85%-7.05%
SPOT £/$
2.3998-2.4002
2.3997-2.4001
ONE-MONTH SWAP £/$
0.0062-0.0058
0.0063-0.0059
ONE-MONTH OUTRIGHT £/$
2.3936-2.3944
2.3934-2.3942
have to purchase pounds forward against dollars. We know that the swap rate indicates a discount on the forward rate relative to the spot rate. To make it worthwhile for the other party to purchase pounds from our trader rather than anywhere else, the trader will have to offer a larger discount on pounds than the one the market is offering. Therefore, the swap rate goes up as follows:
Before
0.0062-0.0058
After 0.0063-0.0059
In this way the other party can get a better discount, 59 points, from our trader than from the market, which offers a 58-point discount. The trader other traders’ rates. At other traders’ rates, our trader would have had also gets a better deal than would have been obtained by dealing at to accept a discount of 62 points as compared with the 59 that are allowed for at the rates the trader is now quoting.
176 THE TREAS
doing the opposite in the spot market, the net exchange posi- price, a net outright forward position will be created. By tion is brought down to zero, and, instead, a swap position
is created.
- Square the cash-flow position (swap position) created by the spot transaction by using the money market (that is, borrow- ing the currency sold spot, investing the currency purchased spot) for a maturity to match the value date of the forward
transaction.
money - Compute the interest differential resulting from the two market transactions and convert it into a swap rate. 4. Obtain the desired forward quote by adding or subtracting the swap rate from the spot rate used in the initial spot
transaction.
To determine the three-month forward bid rate of dollars against Mexican pesos, using Mexican terms and assuming we deal at other people’s rates, we follow the steps indicated above: - We want a quote that gives the rate at which we are willing to buy forward dollars against pesos. Doing the opposite in the spot market means selling dollars against pesos. Since we are dealing at other people’s rates, this is done at the rate at which the market purchases dollars against pesos- Mex$12.4900/$.
- Now we have an outflow in dollars and an inflow in pesos spot. To square the cash-flow position, we do the following: (1) borrow dollars at 7.25 percent for three months and (2) invest pesos at 10 percent for three months. Again, we use the market’s rates.
- The money market transactions produce an interest gain of 2.75 percent per annum. To convert this to a three-month swap rate, we use the spot rate from the initial spot transac- tion, Mex$12.4900/$. The 2.75 percent per annum on the rate Mex $12.4900 equals Mex$0.3435/$, which is the one-year swap rate. Therefore, the three-month swap rate is equal to Mex$0.0859/$ (0.3435 X 3/12). It is a premium on the dollar against the peso because it indicates how much we can afford
to lose in the forward purchase of dollars against pesos with-
out having a net loss.2
- Therefore, the three-month forward bid rate is equal to Mex$12.5759/$ (12.4900+ 0.0859).
The cash flows in Exhibit 8.11 show that if we follow the steps just described and a transaction is closed at the estimated bid rate, roughly, the net exchange position is zero at all times and profits equal zero. The small balances shown at the bottom of Exhibit 8.11 represent the inter- est paid and received. At the spot rate of Mex$12.4900/$, these balances approximately equal one another.
What is the three-month forward offer rate of dollars against pesos? We follow the same steps as above: - The forward quote requires the rate at which the trader is willing to sell forward dollars against pesos. Doing the oppo- site in the spot market means purchasing dollars against pesos. The market spot rate for this transaction is Mex$12.4915/$, the rate at which the market is willing to sell dollars against pesos.
- The spot transaction has created an inflow of dollars and an outflow of pesos. To square the cash-flow position, we (1) invest dollars at 7 percent for three months and (2) borrow pesos at 12 percent for three months. These are the market’s rates.
- The money market transactions produce an interest loss of 5 percent per annum. To convert this to a three-month swap rate, we use the spot rate used in the initial spot transaction, Mex$12.4915/$. The 5 percent per annum on 12.4915 equals Mex$0.6246/$, which is the one-year swap rate. Therefore, the three-month swap rate is Mex$0.1561/$ (0.6246 × 9/12). This is a premium; it indicates the minimum profit that must be obtained in the forward sale of dollars against pesos to compensate for the interest loss.
- Therefore, the three-month forward offer rate is equal to Mex$12.6476/$ (12.4915 + 0.1561).
“We know, in any event, that the dollar must have a premium against the peso because
the dollar has the lower interest rate. See also Exhibit 3.7.