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One of the less restrictive form of the law of one price is known as relative purchasing power parity. Using the equation given in section 6-7b, calculate the expected spot rate for currency B using the relative purchasing power parity with the information provided below:

If country A prices are expected to rise by 3 percent over the coming year, whereas prices in country B are expected to rise by 2.9 percent, and if the current spot exchange rate is $1.32 of currency A / $1 of currency B, then relative purchasing power parity implies the expected spot rate for the currency B in one year will be: