3. The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002 the peso was floated (starting at Ps1.00/$ in January 2002). During the next period of one year, Argentina's inflation rate was 20% and the inflation in the U.S. was 2.2%. (a) What should have been the exchange rate in January 2003 if PPP held? (b) Despite PPP, in January 2003 the Argentine peso was trading at Ps3.20/$. By what percentage was the Argentine peso undervalued?