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The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.3362....

The spot rate between the U.S. dollar and the New Zealand dollar is $1 = NZD1.3362. Assume the interest rate in the United States is 8 percent and in New Zealand is 4 percent.

What should be the 3-month forward exchange rate? (Do not round intermediate calculations. Round your answer to 4 decimal places.)

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Answer #1

Three month forward rate = Spot rate* (1+ domestic rate*90/360 ) /( 1+ Foreign rate*90/360)

= 1.3362* (1+ 0.08*90/360) / (1+ 0.04*90/360)

=1.3494

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