Currently, the UAE dirham (ISO code AED) trades around USD 0.2723/AED. The inflation rates are projected to be 0% in the USA and 2.5% in the UAE. What will be the exchange rate 9 years from now? please quote the exchange rate in the same format as above -- e.g. USD 0.554/AED should be entered as 0.554
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- The current spot exchange rate is USD 1.55 / EUR, and the 3-month forward rate is USD 1.50 / EUR. Based on your analysis of the exchange rate, you are confident that the spot exchange rate will be USD 1.62 / EUR in 3 months. You would like to buy or sell EUR 1 million. What should you do in order to speculate in the forward market?Currently, the spot exchange rate is $1.59 per £ and the three-month forward exchange rate is $1.61 per £. The three-month interest rate is 8.0% per annum in the U.S. and 5.8% per annum in the U.K. Assume that you can borrow as much as $1,590,000 or £1,000,000. Required: Determine whether the interest rate parity is currently holding. If the IRP is not holding, how would you carry out covered interest arbitrage? What will be your arbitrage profit? Explain how the IRP will be restored as a result of covered arbitrage activities.Suppose that the current EUR/GBP exchange rate is £0.86 per euro. The current 6-month interest rates are: GBP 4%, EUR 6%. There are three 6-month forward contracts available, with the following exchange rates: Contract A B C EUR/GBP 0.86 0.85 0.90 You expect to incur an expense of €50,000 in six months. Can you identify any relevant risk in terms of the EUR/GBP exchange rate? Would you use any of the available forward contracts to hedge against this risk? Explain and provide an example.
- What are the expected U.S. dollars UCD ends up receiving for its 250,000 euro receivable based on its exchange rate forecasting given below? Scenario Spot Exchange Rate One Year Later Probability 1 $1.14 15% 2 $1.17 60% 3 $1.20 25%Today is 1 July and the spot exchange rate for AUD 1.00 = EUR 0.7000. You have purchased equipment from a European supplier and the invoice amount is EUR 10,000. a) If you paid the invoice today, what is the AUD cost of the purchase?In alternative universe, the Australian government has decided to enter into a target-zone arrangement with the United States. Australian firm K-Roo has a USD 150,000 payable due in 180 days. Assuming the current exchange rate is AUD1.44/USD, the central rate for the USD/AUD is set at 0.5 USD per AUD, and the currencies are allowed to fluctuate with a 10% band on either side, what is the maximum possible amount (in terms of AUD) that K-Roo could lose due to changes in the future exchange rate? Select one: a. 114000.00 b. 101416.67 c. 133500.00 d. 21600.00 e. -54000.00
- The annual interest rate in Canada is 1.5%, the comparable rate in Europe is 1% and the spot rate for the EUR is CAD 1.4390 /EUR.a.) If covered interest parity holds, what should be the 90 day forward rate?b.) Now assume a Canadian importer is expecting a shipment of goods worth EUR 30 million from France in 90 days which he needs to pay for in EUR and he wants to hedge his exchange rate exposure by using a forward contract. What will be his cost in CAD if he uses a forward contract to hedge is exposure? How much does he lose/gain if the spot rate would rise to CAD 1.4525 /EUR respectively fall to CAD 1.4275 /EUR in the case with the hedge compared to if he just would have waited and purchased the EUR at the then prevailing spot rate? Please state the hypotheticalgains/losses in CAD.c.) What could potentially be the largest loss (expressed in CAD) he could make with the forward contract if the exchange rate could move to very extreme values during this period?As of March 18, 2009, the exchange rate between the Turkish Lira and U.S. dollar is YTL1.70/$. The consensus forecast for the U.S. and Turkey inflation rates for the next 1-year period is 1.3% and 8.5%, respectively. How would you forecast the exchange rate to be at around March 18, 2010? What is the expected rate of change in exchange rate? Using the approximation formula Using the exact formula 2. If the nine-month forward rate F9(Y/$) = 82, and the inflation rate in the U.S. and Japan are 1.6% and -0.8% respectively, what should be S(Y/$)? 3. If the 3-month CD rate is 1.2% (annual) in Thailand and if the expected annual inflation is 5.7%, what is the real annual interest rate? 4. If the International Fisher Effect holds, and if the following information is given, what should be S(MYD/SGD)? The expected inflation in Malaysia is 4% The expected inflation in Singapore is 3% F(SGD/MYD) is 0.3 SGD is Singapore dollar and MYD is Malaysian RinggitThe current spot exchange rate is HUF254 per $1.00. Long-run inflation in Hungary is estimated at 10 percent annually and 3 percent in the United States. If PPP is expected to hold between the two countries, what spot exchange should one forecast five years into the future? Note: Round your answer to 2 decimal places.
- A product sells for $1,000 in the U.S. If the exchange rate between $ and euro is $1 = 0.90 euro, and if ppp holds, what would be the price of the same product in europe?The current spot GBP/USD rate is 1.9455 and the three-month forward rate is 1.9173. Based on your analysis of the exchange rate, you are pretty confident that the spot exchange rate will be 1.9252 in three months. Assume that you would like to trade £5,000,000 in the forward market. What would be your speculative profit in dollar terms if the spot exchange rate actually turns out to be 1.9000. (USD, no cents)Here are today’s rates: Spot exchange rate: 3.20 Polish zloty per U.S. dollar 6-month forward exchange rate: 3.24 Polish zloty per U.S. dollar. You expect the spot exchange rate in 6 months to be 3.26 Polish zloty per U.S. dollar. Evaluate the validity of the following statement: “Given this information, you will profit from a forward exchange speculative position based on your expected future spot exchange rate, if the actual future spot exchange rate in 6 months is 3.25 zloty per U.S. dollar.”
