A bank customer expecting to pay its Brazilian supplier BRL 100 million asks Alpha Bank...

To perform foreign exchange matched position trading, Alpha Bank should match the customer's transaction to eliminate currency risk. Here’s the breakdown:

Customer transaction: The customer buys AUD 1,010,000 at a rate of 101 for BRL 100 million.

Market transaction: To cover this, Alpha Bank should buy BRL at the market rate of 100, paying AUD 1,000,000 (BRL 100 million / 100 = AUD 1,000,000).

This ensures that the bank is not exposed to fluctuations in the BRL/AUD exchange rate.

References

Source: How Finance Works​