1 As of today, S($/C)* 1.60 and the rate of inflation expected to preval for the next year in the U.S. -2% and 3% in the Euro Zore. Assume that the U.S.S actually preciates by 3.9%, resting and exchange was that case, we may conclude that: The Euro depreciated by less than is warranted by PPP. The U.S. Dollar appreciated by more than is warranted by PPP. The U.S. will have an advantage in world export market The competitiveness of Euro Zone will deteriorate in world export market 2 4