Statoil of Norway’s Arbitrage. Statoil, the national oil company of Norway, is a large, sophisticated, and active participant in both the currency and petrochemical markets. Although it is a Norwegian company, because it operates within the global oil market, it considers the U.S. dollar, rather than the Norwegian krone, as its functional currency. Ari Karlsen is a currency trader for Statoil and has immediate use of either $3 million (or the Norwegian krone equivalent).

He is faced with the following market rates and wonders whether he can make some arbitrage profits in the coming 90 days.

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Arbitrage funds available Spot exchange rate (Nok/$) 3-month forward rate (Nok/$) U.S. dollar 3-month interest rate Norwegian krone 3-month interest rate $3,000,000 6.0312 6.0186 5.000% 4.450%