Question 7 Assume that Bank Thailand quotes MYR/THB as THB7

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Question 7

Assume that Bank Thailand quotes MYR/THB as THB7.7610-20 and Bank Singapore quotes MYR/SGD as SGD0.3225-44.

a) Using the cross-exchange rate method, determine the value of Thai baht (THB) in Singapore dollar (SGD).

b) Based on the answer in part (a) (i) above, explain whether the Thai baht is overpriced or underpriced if a money exchange counter at the airport quotes THB/SGD as SGD0.04220-55.

 

question 8

One-year interest rate in New Zealand is 5.5 percent and one-year Malaysian interest rate is 4.0 percent. The spot rate of the New Zealand dollar (NZD) is MYR2.8250. The forward rate of the New Zealand dollar is MYR2.8145. For an initial investment of MYR1,000,000, is covered interest arbitrage feasible for Malaysian investors? Support your answer with the arbitrage profits or losses.

 

question 9

You are given the following exchange rates: EUR/USD : 1.1342 - 86 BND/USD : 0.7231 - 70 Given the information above, calculate the bid and ask quotations for euro in Bruneian dollar (EUR/ BND).

 

question 10

A Huawei smart phone in China costs CNY6200, while the same Huawei smart phone in Malaysia costs MYR3600. Market exchange rate is MYR0.6056/CNY at the time.

1. If purchasing power parity (PPP) holds, what should be the value of the Chinese yuan (CNY) in ringgit (MYR)?

2. Based on your answer in part (i) above, determine whether the market exchange rate for Chinese yuan (CNY) is undervalued or overvalued. Explain your answer with relevant calculations.