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Estimate the profits that could be earned from strategy

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Reference no: EM132390762

Gemstone National Bank expects that the Singapore dollar will depreciate against the dollar from its spot rate of $.43 to $.42 in 60 days. The following interbank lending and borrowing rates exist:

                        Lending Rate    Borrowing Rate

     U.S. dollar                    .07                     .072

     Singapore dollar          .22                     0.28

Gemstone National Bank considers borrowing 10,600,000 million Singapore dollars in the interbank market and investing the funds in dollars for 60 days. Estimate the profits (or losses) that could be earned from this strategy.

Reference no: EM132390762

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