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What is the range of the future actual exchange rate

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Reference no: EM132531128

Suppose you are considering a carry trade that starts from borrowing in Australian dollars. You observe the following quotes from the market:

Spot exchange rate (AUD/USD) 1.35

USD 1-year interest rate 3% p.a.

AUD 1-year interest rate 1.5% p.a.

What is the range of the future actual exchange rate (AUD/USD) in 1 year that will make your carry trade profitable?

Reference no: EM132531128

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