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International Finance
1. Neha has completed her MBA and had joined the Forex Department of a bank. Her manager wanted
her to prepare a document on the different factors that can cause fluctuations in the exchange rate. Help
Neha to prepare the document. (10 Marks)
2. An importer wants to be sure of the delivery of goods on time in the future which should be as per the
date and product description mentioned in the contract. He decided to visit the bank to understand about
the product and the process of issuing the same. (10 Marks)
3. Mr. Mehta was working in the foreign exchange market and was into calculation of forward premiums/
discount of currencies and also calculation of expected inflation rates in order to predict the movement of
currency value. He wanted to teach the methodology of calculation to his subordinate using an example
given below:
a. If one year interest rate in UK and Japan are 1.034% and 0.256% respectively; the spot exchange rate is
172.70 JPY/GBP. What is the forward premium or discount? (5 Marks) b. If the expected inflation rate in
UK is 0.07%, what is the expected inflation rate in Japan? (5 Marks)