Which currency would you invest in to obtain higher expect

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The current interest rate on a one-year Indian rupee (INR) deposit is 5 percent and the yen (JPY) deposit rate is 1 percent. Suppose the current exchange rate, expressed in rupees per yen, is 1.5 and after a year, it is expected to rise to 1.6. Suppose you are an Indian investor (or you can choose to be a Japanese investor if you prefer). Which currency would you invest in to obtain a higher expected rate of return for the year? Show your calculation.

Reference no: EM133252037

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