Based on CIA (Covered Interest Arbitrage), the spot Yen/US$ exchange rate is Yen100/US$ (i.e., 100 Japanese yen

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Based on CIA (Covered Interest Arbitrage), the spot Yen/US$ exchange rate is Yen100/US$ (i.e., 100 Japanese yen per 1 U.S. dollar) and the one year forward rate is Yen200/US$. If the annual interest rate on U.S. dollar CDs is 100%, what would you expect the annual interest rate to be on Japanese Yen CDs?

Posted Date: May 13, 2024 07:50 AM

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Based on CIA (Covered Interest Arbitrage), the spot Yen/US$ exchange rate is Yen100/US$ (i.e., 100 Japanese yen

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According to Covered Interest Arbitrage CIA we can expect the annual interest rate on Japanese Yen CDs to be significantly lower than the annual inter... View the full answer

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