F360 :) = 1.2486. Suppose that, according to The one-year and two-year euro forward exchange rates are $1.1351/ and $1.2486/, respectively. Equivalently, USD USD = 1.1351, F720 EUR EUR interest rate parity, the euro spot rate, the annual dollar and euro interest rates, and the one-year and two-year euro forward rates are all in equilibrium, so covered interest arbitrage is unavailable. Assuming the annual interest rates in the first and second years are identical, the equilibrium spot euro rate based on the interest rate parity is $1.0216/ $1.03197 $1.0654/ $1.1000/