A foreign exchange trader with a U.S. bank took a short position of £5,000,000 when the $/£ exchange rate was 1.16. Subs

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answerhappygod
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A foreign exchange trader with a U.S. bank took a short position of £5,000,000 when the $/£ exchange rate was 1.16. Subs

Post by answerhappygod »

A foreign exchange trader with a U.S. bank took a short position
of £5,000,000 when the $/£ exchange rate was 1.16. Subsequently,
the exchange rate has changed to 1.22. Is this movement in the
exchange rate good from the point of view of the position taken by
the trader? By how much has the bank’s liability changed because of
the change in exchange rate?
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