Suppose the U.S.-Indian rupee exchange rate is 0.01 $ / rupee. Suppose interest rates in India are 18% and 8% in the United States. If the forward rate is a prediction of future rates, based on the interest rates, the rupee is expected to (appreciate or depreciate) by ___________% What should the forward rate for the $ / rupee rate be? __________
Added by Alex S.
Step 1
First, we need to calculate the interest rate differential (F – R) between India and the United States: F – R = 18% - 8% = 10% Show more…
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