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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