Forex And Interest Rates Illustration 6


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Forex And Interest Rates Illustration 6

From the following data decide on the best alternative for borrowing INR 5 million for a temporary period of 6 months on a risk-free basis. Ignore transaction costs.

 

Currency

Spot

6 month forward

Interest Rates

INR

6.25% – 6.50%

USD INR

46.82/46.92

47.12/47.22

4.50% – 4.75%

EUR INR

61.82/61.92

62.12/62.22

5.00% -5.25%

GBP INR

94.00/94.10

94.24/94.34

5.50% – 5.75%

(Ans.: 162500, 162481, 162451, 162355. Borrow in GBP)


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