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The yen and the swiss franc have a 120yen/ sf 1 exchange rate, meaning one swiss franc buys 120 yen in the spot ER market.
The yen and the swiss franc have a 120yen/ sf 1 exchange rate, meaning one swiss franc buys 120 yen in the spot ER market. If the swiss franc has an interest rate of .06 and the yen rate is -.02, what is the forward exchange rate for IPT (interest parity theory) to be attained? Show everything in yen terms, i., e., how much swiss francs one yen buys (yen is in the denominator.) If there is no equilibrium initially, will there be equilibrium eventually? If so, what will transpire?
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