1) Market is quoting exchange rates for pair of currencies as follows:

USD/SGD 1.3750/60

USD/INR 71.73/74

XYZ Inc., Singapore is planning to remit SGD 1 mn to its subsidiary in India. The Indian subsidiary wants to convert this SGD to INR. What will be the rate quoted by its bank for SGD /INR conversion?

2) Following quotes are available in Mumbai:

USD/ INR 72 (Spot) and USD/INR 6th month FWD 160

EUR/INR 84 (Spot) and EUR/INR 6 month FWD 151

Convert the differentials into annualized percentage (%)

3)

The current spot exchange rate is GBP/USD 1.30 and the three-month forward rate

is GBP/USD 1.25. Based on your analysis of the exchange rate, you are pretty confident that the spot exchange rate will be GBP/USD 1.27 in three months. Assume that you would like to buy or sell GBP1,000,000. (10 m)

a. What actions do you need to take to speculate in the forward market? What is the expected dollar profit from speculation?

b. What would be your speculative profit in forward dollar terms if the spot exchange rate actually turns out to be GBP/USD 1.21.