QUESTION 2 (25 MARKS)

As a banker at an Oisee Bank, you are given the following quotations:

Exchange Rate Spot Rate 1-month forward 2-month forward

Indian Rupee (INR) RM5.5000/10 20/40 60/50

Japanese Yen () RM3.6000/10 20/60 30/40

Thai Bath (THB) RM8.9000/10 40/30 60/50

Country Rate (Percent)

India 8

Japan 4

Malaysia 5

Thailand 6

1. If the banks customer need THB10,000, how many RM would he exchange today?
2. If you are expected to receive INR50,000 in 1 months time, how much is it pay in RM?

3. If the banks customer wishes to sell 200,000 in 2 months time, how much he will receive in RM?

4. What is the annualized premium or discount on the 2-month forward bid RM per rate?
5. What is the bid-ask price and percentage spread of INR per THB in 60 days?
6. What is the bid-offer price and percentage spread of INR in in 90 days?

If you need to pay 100,000 in 3 months time for a foreign currency transaction, how much would that be in INR?