Covered interest rate arbitrage. As a trader for the London-based money market Commonwealth Fund, you see the following quotes:

a. From Barclays Bank, one-year sterling deposits/loans at 6. 0 percent to 6. 125 percent.

b. From Bangkok Bank, one-year Thai baht (THB) deposits/loans at 12. 50 percent to 12. 75 percent. Spot exchange rate is THB 45 = £1, and one-year forward Thai baht is at a 6. 00 percent discount vis-à-vis the pound sterling.

Do you see profitable opportunities for interest rate arbitrage? What are the risks, if any, involved in these transactions?