Question 23.6: For May 23, 2008, The Financial Times reported a spot ruble–...
For May 23, 2008, The Financial Times reported a spot ruble–dollar exchange rate of R23.5937/$ and a one-year forward exchange rate of R24.2316/$. At the time, the yield on short-term Russian government bonds was about 5.7%, while the comparable one-year yield on U.S. Treasury securities was 2.1%. Using the covered interest parity relationship, calculate the implied one-year forward rate. Compare this rate to the actual forward rate, and explain why the two rates differ.
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