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Currently the spot exchange rate is $1.558 per pound (USD/GBP). The interest rate in the UK...

Currently the spot exchange rate is $1.558 per pound (USD/GBP). The interest rate in the UK is 6%. The one-year forward exchange rate is $1.5200/GBP. If interest rate parity holds, what must be the US interest rate for the same period?

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Answer #1
Future rate=Spot rate*((1+Quoted currency Risk free rate)/(1+Base currency Risk free rate))^time
1.52=1.558*((1+Quoted currency Risk free rate)/(1+0.06))^1
Quoted currency Risk free rate% = 3.41
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