Question

In: Finance

How do you find the spot rate and forward rate of the Japanese Yen? I need...

How do you find the spot rate and forward rate of the Japanese Yen? I need the value (with unit if applicable) and the term (Q3,Q4, 2-month, 4-week, ect)

Use today's date and December 2020.

Solutions

Expert Solution

Spot Rate and Forward Rate:-

The precise meanng of the terms " forward rate" and "spot rate" are somewhat diferent in different marekets. But what they have in common is that they refer, for example, to the curent price or bond yield the spot rate versus the price or yield for the same product or instrument at some point in the futrure the forward rate.

In commodities future markets, a spot rate is the price for a commodity being traded immediately, or "on the spot". A forward rate is the settlement price of a transaction that will not take place until a predetermined date it is forward looking.

A spot rate or sot price, repressents a contracted price for the purchase or sale os a commodity, security, or currency for immediate delivery and payment on the spot date which is normally one or two business days aftr the trade date. The spot rate is the current price quoted for immediate settlement of the contract. For example, if during the month of august a wholesale comapany wans immediate delivery of orange juice, it will pay the spot price to the seller and have orange juice delivered withhin tow days.

Formula of calculate the forward or spot rate

Forward Rate = Spot Rate*1

where:-IRO= interest rate of overeseas cost

  IRD= interesst rate of domestic cost

we can find spot rate or forward rate by this help also:-

Spot exchange rate:- -----------

Intrest Rate in Base currency (%):--------------

Interest Rate in Price currency (%)--------------

Spot date:------------

forward date:----------

forward period:-------

Calculate-----------

To calculate the forward Rate and Spot rates for the Yen in the relationship of dollars per yen.

Y(yen)/ $ forward exchange Rate is ( 1/109.50=0.0091324). Y/$ spot rate is (1/109.38=0.0091424)

The basic of calllculating a forward rate require both the current spot price of the currency pair and the interest rates in the two countries. Consider this example of an exchange between the japanese uen and the US dollar.

  • The ninety day yen to dollar (Y/$) forward exchange rate is 109.50
  • The spot rate Y/$ rate is 109.38

for the calculation of periods other than a year, you would input the number of days as shown in the following example. A three month forward rate is equal to the spot rate multiplied by

(1+the domestic rate times *90/360/1 + foreign rate time *90/360)

to calculate the forward rate,multiply the spot rate by the ratio of interst rates and adjust for the time until expiration. So, the eforward rate is equal to the spot rate x (1 + foreign interest rate)/ 1+ domestic interest rate).


Related Solutions

The spot rate of Japanese Yen is 105 Yen per dollar. After one year spot rate...
The spot rate of Japanese Yen is 105 Yen per dollar. After one year spot rate will be is 115 Yen per dollar. If you deposit 1000000 yen in one year saving account with 5% interest rate what will be the dollar rate of return on deposit. Is there a interest parity between Yen and dollar deposit?
Money Market Hedge Japanese Yen ¥ 250,000,000 Receivable In 3 months Spot Rate ¥105/$ Forward 3...
Money Market Hedge Japanese Yen ¥ 250,000,000 Receivable In 3 months Spot Rate ¥105/$ Forward 3 months is ¥100/$ 3M iUS = 8% per year iJPY = 7% per year 1. P.V. of receivable? 2. Covert P.V. of receivable at Spot rate? 3. At maturity loan? Please show formulas and steps. Thank You
How do forward markets reflect expectations of future spot rate? How do spot and forward markets...
How do forward markets reflect expectations of future spot rate? How do spot and forward markets align with interest rate and expected inflation differentials? What is uncovered interest arbitrage? Can balance of payments dynamics explain exchange rate movements?
1)The spot rate for the yen is ¥110/$ and the 180‑day forward rate is $.008/¥ ....
1)The spot rate for the yen is ¥110/$ and the 180‑day forward rate is $.008/¥ . Which of the following must be true in order to prevent covered interest arbitrage? a) interest rates for investments of similar risk must be equal in both countries. b) Interest rates for investments of similar risk must be higher in Japan than the US. c) Interest rates for investments of similar risk must be higher in the US than in Japan. d) Cannot be...
As at 1st January, 2017, the spot exchange rate between the U.S. dollar and Japanese Yen...
As at 1st January, 2017, the spot exchange rate between the U.S. dollar and Japanese Yen was trading at $1.00 equivalent to ¥100. The local bank offered the Company to exchange $1.00 for ¥102 on 31st December, 2017. The Interest rates on one year government bonds were 6% in U.S. and 10% in Japan. The company can borrow and lend at the risk-free rate on government bonds. As an Investment Advisor you have been approached for advice by the CEO...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.00905, while...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.00905, while in the 90-day forward market 1 Japanese yen = $0.00913. In Japan, 90-day risk-free securities yield 1%. What is the yield on 90-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.006, while...
Assume that interest rate parity holds. In the spot market 1 Japanese yen = $0.006, while in the 180-day forward market 1 Japanese yen = $0.0067. 180-day risk-free securities yield 1.45% in Japan. What is the yield on 180-day risk-free securities in the United States? Do not round intermediate calculations. Round your answer to two decimal places.
The Euro -Yen dollar spot rate is £$0.89/¥$. When the45-day forward exchange rate is £$0.90/¥$...
The Euro -Yen dollar spot rate is £$0.89/¥$. When the 45-day forward exchange rate is £$0.90/¥$ then the Euro forward dollar is selling at discount or premium of _________%
You have $1,000,000 to start with. Here are the facts: Yen Spot Rate = 106 Yen/$...
You have $1,000,000 to start with. Here are the facts: Yen Spot Rate = 106 Yen/$ Yen Fwd Rate = 103.5 Yen/$ 6 months Interest Rates in Japan are 4% per annum (2% for 6 months). Interest Rates in the USA are 8% per annum (4% for 6 months) for securities of similar risk and maturity. What should you do?
1.The current U.S. dollar-yen spot rate is 102¥/$. If the 90-day forward exchange rate is 101¥/$...
1.The current U.S. dollar-yen spot rate is 102¥/$. If the 90-day forward exchange rate is 101¥/$ what is the forward exchange premium or discount for ¥$. 2.Assume the current U.S. dollar-British spot rate is 0.71£/$. If the current nominal one-year interest rate in the U.S. is 2.7% and the comparable rate in Britain is 3.9%, what is the approximate forward exchange rate for 180 days?
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT