Which of the following is not true about the balance of payments and its impact on currency value?

a.

Export less than import creates a deficit in Balance of Paaments

b.

Balance of payment deficit appreciates the value of currency

c.

Import less than exports will result in surplus BOP

d.

Deficit in BOP will create a low demand for domestic currency

1. An importer in Oman wants to exchange OMR to KWD to make payment to the exporter in Kuwait after 3 months. He goes to a forex dealer in Oman who provides the following quotes for OMR/KWD.

Spot rate =1.35695-6972

3 months rate = 1.45692-8642

How much OMR will the importer need to get KWD90000 after 3 months?

a.

133777.8

b.

131122.8

c.

123715.8

d.

121915.8

e.

None

OMR is quoted against USD and EURO. Under which of the following condition will the trader have a possibility of arbitrage?

a.

When calculated cross rate of OMR/USD is greater than quoted rate

b.

When the calculated cross rate of USD/EURO is different from Quoted cross rate

c.

When calculated cross rate of OMR/EUR is different from Quoted cross rate

d.

When calculated cross rate of USD/EUR is equal to Quoted cross rate