Exchange rate and interest rate quote

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Reference no: EM131506457

Takeshi Kamada- CIA Japan (A). Takeshi Kamada, a foreign exchange trader at Credit Suisse ( Tokyo), is exploring covered interest arbitrage possibilities. He wants to invest $5,000,000 or its yen equivalent, in a covered interest arbitrage between U.S dollars and Japanese yen. He faced the following exchange rate and interest rate quotes, Is CIA profit possible? If so, how? 

Atrbitrage funds available $5,000,000

Spot rate (YEN/DOLLAR) 118.60

180-day forward rate (YEN/DOLLAR) 117.80

180-day U.S. dollar interest rate 4.800%

180-day Japanese yen interst rate 3.400%

Reference no: EM131506457

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