Take the two currenciesSouth African Rand (ZAR) and Indonesia Naira (NGN). Suppose the one-year forward exchange rate
Question:
Take the two currencies—South African Rand (ZAR) and Indonesia Naira
(NGN). Suppose the one-year forward exchange rate is 23 NGN per ZAR and the spot exchange rate is 20 NGN per ZAR. What is the forward premium on NGN (the forward discount on ZAR)? What is the difference between the interest rate on one-year ZAR deposits and that on one-year NGN deposits (assuming no repayment risk)?
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Related Book For 
International Economics Theory And Policy
ISBN: 9781292409719
12th Edition
Authors: Paul Krugman , Maurice Obstfeld, Marc Melitz
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