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Citibank wishes to invest in Yen loans at a rate of 10%. The bank will fund the loans in the domestic CD market at a

Citibank wishes to invest in Yen loans at a rate of 10%. The bank will fund the loans in the domestic CD market at a rate of 6.3%. This on-balance-sheet FX risk will be hedged in the spot market at some forward rate. The spot ratio yen is USD 0.60/Yen. What must be the forward exchange rate to eliminate the preference for the yen loans?

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