Risk free ISK carry trade

Okay guys I'm new to the forum so Hi!...well I asked my trader at work about this carry trade and basically his answer was if it's too good to be true then it is and then sent me away to go and find out!.....

Using rates from earlier in the week please see the below and let me know if I'm right...I've asked a few people at work and everyone says on paper it works, but it just seems too good to be true.

P.S the only reason I picked GBP/ISK vs USD/ISK is because I like in the UK..haven't looked at any other pairs but I would expect it works also.

SPOT 145.462 - 145.576
6 month fwd 145.857 - 148.203

Day 1 - £1mio = 145,462,000 ISK

Overnight rates in Iceland are a little over 15%..assume 15%...

after 6 months,

= 156,371,650 ISK

Having bought the 6 month forward, sell ISK @ 148.203

= 1,055,118 GBP

Pay back GBP interest @ 5.5%

= 1,055,118 - 27,500 (cost of borrowing)

= 27,618 GBP (2.7% over 6 months) AFTER you have paid back cost of borrowing.

So no interest rate or fx risk, only credit risk of where you money is? Or have I messed up the calcs?

bump...(sorry)

surely someone can tell me whether the post below works?!...what am I missing?

it works but sadly not a lot of people have ISK on their platform
im one of them
sounds very interesting too bad i cant trade it

Where can you trade forwards? Which broker?

Surely there must be someone who can offer FX forwards?...

The quotes I used are my traders, so I'm not sure how accurate they are and whether they can actually be executed at the rate

I don't think that's right man, the price difference between the spot and the forward is the interest rate differential, so it takes into account the interest you would earn.

Any comments from a carry trade pro?

I don't think that's right man, the price difference between the spot and the forward is the interest rate differential, so it takes into account the interest you would earn, so what you earn on interest you would lose in the price difference between selling GBPISK spot and buying GBPISK fwd.

Or am I wrong? Any comments from a carry trade pro?

well thats what you would assume..ties back to the whole interest rate parity theory doesn't it....fx forward rates willl correct themselves so there is no arbitrage

I'd be curious to know more though, I'm really interested in carry trades if anyone can help.