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You can purchase $1 million of 1-year Naranja sovereign hard currency bonds to yield 5%,...

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Accounting

You can purchase $1 million of 1-year Naranja sovereign hard currency bonds to yield 5%, or 2.50% more than 1-year US Treasury bonds. Naranja's 1-year local currency government bonds yield 8%. Current FX rate is 10 Naranja Pesos per 1 US Dollar. What is the future FX rate of Naranja Pesos to US Dollars for 1-year that generates the same rate of return as the 1-year Naranja hard currency bonds?

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