What does this offsetting mean to westwood ltd

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In March 15, Westwood Ltd. contracted Mauve Tiles to supply tiles from Italy and promised to make an initial payment of €250,000 on Dec 15. It agreed to enter a 270-day forward contract with Bank X to buy €250,000 at KES 131.5 per euro. On June 15, the Italian company informs Westwood Ltd that it's unable to fulfill the contract since there has been a fire at its factory and therefore terminates the contract. Westwood Ltd negotiates a second forward contract with Bank X now to sell the €250,000 on Dec 15, to offset the earlier forward contract. The forward rate now is KES 132.3 since the spot rate of the Kenya shilling has increased over the last two month.

What does this offsetting mean to Westwood Ltd?

Reference no: EM132666344

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