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Discuss the scenario below, as to whether a riskless opportunity exists in the FX market and how to capitalise the opportunity. Suppose that you can

Discuss the scenario below, as to whether a riskless opportunity exists in the FX market and how to capitalise the opportunity.

Suppose that you can borrow 21 million today. Assume that the current spot rate is 110/AUD and that the 6-month forward rate (Forward /AUD) is Forward /AUD = 107/AUD. The 12-month interest rate on a Yen deposit is 0.1% and on an AUD deposit is 7.5%.

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