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On July 27, 2009 the spot ruble-dollar exchange rate was R30.9845/$ and the one-year forward exchange rate was R33.7382/$. At the time, the yield on

On July 27, 2009 the spot ruble-dollar exchange rate was R30.9845/$ and the one-year forward exchange rate was R33.7382/$. At the time, the yield on short-term Russian government bonds was about 11%, while the comparable one - year yield on the US Treasury securities was 0.5%. Using the covered interest parity relationship, calculate the implied one-year forward rate. Compare this rate to the actual forward rate and explain why the two rates differ.

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