1. Suppose the U.S.-Indian rupee exchange rate is 0.01 $ / rupee.

Suppose interest rates in India are 18% and 8% in the United States.

1. to: F R + i* @ i

• R

Foreign currency forward rate change in % + foreign interest % = U.S. interest rate.

If the forward rate is a prediction of future rates, based on the interest rates, the rupee is expected to (appreciate or depreciate) by

___________%

What should the forward rate for the $ / rupee rate be? __________