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What is Reverse Cash and Carry Arbitrage Explained about?

Cash and carry arbitrage and reverse cash and carry arbitrage involve borrowing in a low interest rate market, converting to another currency, investing in the higher interest rate market, and using futures to lock in the exchange rate. For cash and carry arbitrage, the futures price must be lower than the theoretical forward price. For reverse cash and carry, the futures price must be higher. Examples are provided of borrowing SGD, converting to INR, and investing in India, then using forwards to lock in t

Author

debojyoti

Language

EN