Currently, Interest rate in the US is 3% and interest rate in Japan is 5%.
According to the IRP, which of the following is correct?
A. in forward market, the value USD should be higher than the value of USD in spot market by about 2%.
In other words, USD should exhibit a forward premium of about 2% over JPY
B. in forward market, the value JPY should be higher than the value of JPY in spot market by about 2%.
In other words, JPY should exhibit a forward premium of about 2% over JPY
C. the value of USD in spot market will rise by about 2% against JPY in the future.
D. the value of JPY in spot market will rise by about 2% against USD in the future.