Sayang Selasih Berhad is given the following quotes: Spot rate                                    USD0.7250/NZD Six-month forward rate                USD0.7350/NZD Interest rate United States           7 percent per annum Interest rate New Zealand            6 percent per annum Assume that Sayang Selasih Berhad can borrow as much as USD1 million or NZD5 million for its coming project. If Interest Rate Parity (IRP) is not holding, determine how would Sayang Selasih Berhad carry out covered interest arbitrage (CIA) opportunity and compute the profit. Different interest rate                   = 7% - 6 %           = 1% p.a.                                                      = 3.5% - 3%    = 0.5% 6-month

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Exchange Rate Risk

It is the possibility that the value of a currency will fluctuate in the future. In the wake of globalization, business establishments have increasingly ventured into international markets. The volume of international trade has prospered excellently in the near past and is expected to be more affluent in the future. The use of exchange-traded derivative financial instruments has been multi-folded to provide for the requirements of various MNCs and offshore potential investors. Most banks and financial institutions have helped integrate the global economies. Our Government has introduced some bold and extreme measures to fulfil the purpose behind the fiscal, industrial, and monetary policies. The enactment of GST is a huge step towards streamlining the taxation system of the country. Owing to Covid-19, this aspect of corporate risk management has become critical.