Hi all, the question asks to calculate the USD/NZD spot price one year from now.
Bid ask USD/NZD= 0.6740 / 0.6770
1y Libor USD / NZD= 0.80% / 2%
The solution suggests to use the uncovered interest parity model:
in the solution they also say that USD is the foreign currency, therefore the solution is mid-price USD/NZD 0.6755 x (1.008/1.02) = 0.6766
Has anyone solved this question? Why is USD the foreign ccy?