The EUR and INR exchange rate

Assignment Help Financial Management

Reference no: EM131838008

1. The INR appreciates 4% versus the USD. The EUR depreciates 10% versus the USD. What’s the approximate appreciation or depreciation we might see in the EUR/INR exchange rate?

2. MSU Bank believes the New Zealand dollar will appreciate over the next 6 months from $.41/NZ$ to $.43/NZ$. The following 6-month interest rates apply: (the rates are periodic rates so you do not need to adjust them at all – we do not need to multiply by 180/360 or anything like that)

Currency Lending Rate Borrowing Rate

Dollars 3.5% 4.25%

New Zealand dollar (NZ$) 2.6% 3.05%

MSU Bank has the capacity to borrow either NZ$10 million or $5 million. If MSU Bank’s forecast if correct, what will its U.S. dollar profit be from speculation over the 6-month period?

Reference no: EM131838008

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