Illustrate inflation expectations in korea compared

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Reference no: EM1388904

Q. "If the spot rate for the Won is 800 won equals 1 US $ also the annual interest rate on fixed rate one-year deposits of won is 9% also for US$ is 3%, illustrate what is the one-year forward rate for one won in terms of dollars ($)? Assuming the same interest rates, illustrate what is the 8-month forward rate for one dollar in terms of won? Is this an indirect or a direct rate? If the forward rate is an accurate predictor of exchange rates, in this case will the won get stronger or weaker against the dollar? Illustrate what does this indicate about inflation expectations in Korea compared to the US?"

Reference no: EM1388904

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