Question: ( a ) Current interest rate in the UK and India are 1 . 5 % and 5 . 7 5 % per annum respectively.

(a) Current interest rate in the UK and India are 1.5% and 5.75% per annum respectively.
Todays rate for one pound to Indian rupee is INR92.65/. In addition, 3-month forward
exchange rate for one pound to Indian rupee is INR88.25/.
(i) Determine whether the interest rate parity (IRP) is currently holding or not.

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