Forex And Interest Rates Illustration 3
From the following data decide on the best alternative for borrowing INR 2 million for a temporary period of 6 months on a risk-free basis. Ignore transaction costs.
Â
Currency |
Spot |
6 month forward |
Interest Rates |
INR |
|
|
5.75% – 6.00% |
USD INR |
45.8830/45.8860 |
46.2330/46.2360 |
4.25% – 4.50% |
EUR INR |
62.2545/62.2575 |
62.5545/62.5575 |
4.75% -5.00% |
GBP INR |
91.4750/91.4780 |
91.6750/91.6780 |
5.25% – 5.50% |
(Ans.: 60,000, 60,733, 59,978, 59,560. Borrow in GBP)
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