During the currency crisis of September 1992, the Bank of England borrowed DM 33 billion from the Bundesbank when a pound was worth DM 2.78 or $1.912. It sold these foreign exchange market for pounds in a futile attempt to prevent a devaluation of the pound. It repaid these DM at the post-crisis rate of DM 2.50-£1. By then, the dollar/pound exchange rate was $1.782-1. What were the cost of intervention to the Bank of England in DM in the pounds and in dollars, respectively? 

a. 1.3295 billion pounds, 0.8260 billion dollars 

b. 1.3295 billion pounds, 2.3692 billion dollars 

c. 9.2400 billion pounds, 1.2012 billion dollars 

d. 1.3295 billion pounds, 2.5420 billion dollars

Answer rating: 100% (QA)

In DM Amount borrowed 33000000000278 Amount repaid 3300000000025 Cos... View the full answer