In March 2018, the spot exchange rate for Chinese Yuan Renminbi (CNY) was 6.3359 CNY per U.S. dollar (USD). Suppose that at the same time the one-year interest rate in the United States was 3.15% and the one-year interest rate in China was 4.85%. Based on these rates, what should the six-month forward exchange rate for CNY be so that the no-arbitrage condition holds? Quote the forward exchange rate in USD/CNY.

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The expected spot exchange rate for CNY in one year Calculating the oneyear interest rate in China W... View the full answer