Assume the following interest rate and exchange rate quotes and you have $1,000,000 or its yen equivalent, to invest:

Spot exchange rate: 102.60/$

180 day forward rate: 101.80/$

180 day $ interest rate: 1.60% p.a.

180 day interest rate: 0.80% p.a.

If you decide to seek the higher interest rate in available in USD but not covering the forward dollar receipts, how should you redesign your strategy? Assess the riskiness of this decision. The Federal Reserve decided to keep the interest rate unchanged on September 21 meeting. However, there is a high expectation that the Fed might increase the interest rate later this year, how would you factor this into your decision?