1. Suppose that DBS Bank in Singapore wishes to enter a swap for Thai Baht (THB) in three months' time for three months. The notional amount is 500,000 Singaporean Dollars (SGD). 
2. Based on the information below, calculate and explain the cash flows associated with each swap transaction. 

 

Exchange Rate	Spot	3-month	6-month	9-month
THB/SGD	25.89-94	84/71	73/68	55/49

Based on the information above, what must be the relationship between the currency pair and the interest rates in Singapore and Thailand? Explain in detail your answer.  

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2. As a foreign exchange trader at Deutsche Bank, one of your customers would like a Yen quote on Australian dollars. The current spot market rates are JPY101.37-85/USD and AUD1.2924-44/USD. Calculate the bid and ask Yen cross rates on spot Australian dollars. Which of the two rates would you quote to your customer if they wished to buy Australian dollars? Please explain in detail every step of the trade.

 

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Answer rating: 100% (QA)

A Cash Flows Associated with the Swap Transaction To calculate the cash flows associated with the swap transaction we need to consider the exchange rate and the notional amount Given Notional amount 5... View the full answer