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Ruggerman bank expects that the Mexican peso will depreciate against US dollar from it is spot rate of $0.43 to $0.42 in 60 days. The

Ruggerman bank expects that the Mexican peso will depreciate against US dollar from it is spot rate of $0.43 to $0.42 in 60 days. The following interbank lending and borrowing rates:

Currency Lending Rate Borrowing Rate
U.S Dollar 7.0% 7.2%
Mexican peso 22.0% 24.0%

Assume that Ruggerman has a borrowing capacity of MXP10 million in the interbank market. Show the steps and calculate the profit could be generated from this strategy.

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