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Market inflation expectations for japan

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Reference no: EM132417247

If the spot rate for the Yen is .0085 Yen is equal to 1 US $, and the annual interest rate on fixed rate one-year deposits of Yen is 0.2% and for US$ is 1.5%, what is nine-month forward rate for one dollar in terms of Yen? Assuming the same interest rates, what is the 18-month forward rate for one Yen in US$s? Is this an indirect or a direct rate? If the forward rate is an accurate predictor of exchange rates, in this case will the Yen get stronger or weaker against the dollar? What does this indicate about the market's inflation expectations for Japan as compared to the US?

Reference no: EM132417247

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