Indian rupee forward contracts. The Indian rupee (INR) is currently trading at INR 50 = US$1. With 90-day Indian-rupee and U.S. dollar treasury bills currently yielding 10 percent and 2 percent per annum, respectively, what would be the forward INR price of US$1? What assumptions are you making with respect to the credit rating of either government securities? Please explain the calculation Answer -  INR 0.01970.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter22: International Financial Management
Section: Chapter Questions
Problem 10P
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Indian rupee forward contracts. The Indian rupee (INR) is currently trading at INR 50 = US$1. With 90-day Indian-rupee and U.S. dollar treasury bills currently yielding 10 percent and 2 percent per annum, respectively, what would be the forward INR price of US$1? What assumptions are you making with respect to the credit rating of either government securities?

Please explain the calculation

Answer - 

INR 0.01970.

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