(i) The rate of inflation in USA is likely to be 3% per annum and in India it is likely to be 6.5%. The current spot rate of US $ in India is Rs.43.40. Find the expected rate of US $ in India after one year and 3 years from now using purchasing power parity theory. (4 Marks)

(ii) On April 1, 3 months interest rate in the UK and US $ are 7.5% and 3.5% per annum respectively. The UK /US $ spot rate is 0.7570. What would be the forward rate for US $ for delivery on 30th June ?