Question: (Applying interest rate parity) The one-year current yield on treasury bonds in India is 5 percent. The same yield on the UK treasury bonds is

(Applying interest rate parity) The one-year current yield on treasury bonds in India is 5 percent. The same yield on the UK treasury bonds is 0.25 percent for one year.

The exchange rate between Indian rupee and the British pound as of now is 81.77 per £1. If the interest rate parity holds, what will the exchange rate be between the British pound and the Indian rupee one year from now?

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