Interbank lending and borrowing rates exist

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Reference no: EM13870642

You expect that the INR will depreciate against the dollar from its spot rate of $.0.15 to $.0.125 in 60 days. The following interbank lending and borrowing rates exist:

Lending Rate Borrowing Rate

U.S. dollar 1.0% 2.5%

INR 12.0% 15.0%

How can you profit from the above given information. Estimate the profits that could be earned given your maximum borrowing limits are either $1,500 or INR 100,000?

Reference no: EM13870642

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