Suppose the interest rate in Taiwan is 4% and the forecast Taiwanese inflation is 0.5%. At the

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Suppose the interest rate in Taiwan is 4% and the forecast Taiwanese inflation is 0.5%. At the same time, Panamanian interest rate is 1.5% and forecast Panamanian inflation is 2%

A. Based on these figures, what were the real interest rates in Taiwan and Panama?

B. If the 15-day forward rate is Taiwan $2.5/Balboa, is there arbitrage opportunity (in other words, does the interest rate parity hold)?

Posted Date: Oct 04, 2021 09:02 PM

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Suppose the interest rate in Taiwan is 4% and the forecast Taiwanese inflation is 0.5%. At the

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