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Currency carry trade to breakeven

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A trader can borrow $1,000,000 US dollars. Suppose the one-year borrowing rate in US dollars is 4%, the one-year lending rate in Euros is 6%, and the spot exchange rate is $1.55/€. What spot rate prevailing in one year is needed for the currency carry trade to breakeven? What spot rate prevailing in one year is needed to for the currency carry trade to be profitable.

Reference no: EM133074783

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