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You work on a FX trading desk. A client calls and asks you the deposit rate...

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Finance

You work on a FX trading desk. A client calls and asks you thedeposit rate you can guarantee them in the Malaysian Ringgit (MYR)currency for one year. You have the below information. What depositrate can you offer the client as a guarantee you can secure them?Your main funding currency is USD. Answer in percentage points tothe fourth decimal (e.g. 2.5000% is 2.5000).

USD/MYR Spot: 4.1090 USD/MYR

1-yr Forward FX: 4.1695 USD

1yr Interest Rate: 2.4400%

Answer & Explanation Solved by verified expert
3.8 Ratings (678 Votes)
As per Interest rate Parity Forward price Spot price1interest rate in UShome1interest rate in Malaysiaaway here Spot 41090 USDMYR    See Answer
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