3-month TL interest rates = 20% or 0.2 3-month Eurodollar LIBOR=3% or TL 0.03 higher interest, so...
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Question:
Spot: 1 USD = 6.00 TL
Thus, our fund manager's purchases are: 6.000.000 ₺ Formula: 1000000*6.00
TL account with a 3-month maturity deposit Our fund manager will receive on 31 March 2020: 6.300.000 ₺
a) 31 March 2020 spot dollar/TL Suppose the exchange rate is 6.3 TL per dollar.
Is our dollar-based fund manager better than staying in Eurodollars? Show your calculations
b) Let's say on January 1, 2020, our London fund manager sells future Turkish Lira at 6.25 TL per dollar in addition to the TL earning asset.
Comes March 31, 2020. Is our dollar-based fund manager better than staying in Eurodollars? Show your calculations
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