The dollar cost have gone up if interest rate parity holds

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Reference no: EM132021683

Suppose that an Indian Company needs to pay USD 100,000 in a year from now. Indian interest is expected to be 7.68% per annum while U.S. interest is expected to be 3.2%. The current spot rate is INR64.8100/USD

A. What will be the INR amount that the Indian company pay next year?

B. By what percent will the dollar cost have gone up if interest rate parity holds?

C. What is the expected INR/USD spot rate next year?

Reference no: EM132021683

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