Consider the following data for Indonesia: 2008 2009 2010 Real GDP growth (0/0] 6 5.6 4.3 Consumer prices (% change) 6.0 5.0 3.8 Lending interest rate (avg; %] 13.6 13.9 13.2 I Bung-uh (muss 1: inch! sub) m g , ,3 W . 4- .\" 'v ' "Iv ' A I\" \"so A. M\" .'rr-g." \"' m ' m \"n :3. M ii Au 5. M In M g H II Au u San: mm In May 2010, you are considering doing a 2 year carry trade (borrowing in one currency and investing in another) between the US and Indonesia. FYI, the yield on 2-year government bonds in the US is at about 1.0%. Where would you borrow and where would you invest? What risk factors are involved in this carry trade? Focus on macroeconomic risk factors and not on exotic carry trade ideas. In June 2010, Indonesia plunges into a recession due to a massive ood, and in response the Indonesian Central Bank carries out further expansionary monetary policy. The interest rate drops to 6%. How would these developments affect returns from your carry trade