forward contract and interest rate
Hi all,
R40 Currency Risk Management
"When a Japanese investor hedges her U.S. assets against currency risk,
she sells dollars forward against yen and must pay the U.S. dollar interest rate
while receiving the yen interest rate."
Why must she pay the U.S. dollar interest rate and receive the yen interest rate??
This interest rate matter relates to basis risk?
Please explain about this interest rate.. |