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4. Assume that the current exchange rate is / = 1.1 and the expected exchange rate is 1.165. The interest rates of deposits on dollar

4. Assume that the current exchange rate is / = 1.1 and the expected exchange rate is 1.165. The interest rates of deposits on dollar is 10% and on euro is 5%. Suddenly, the exchange rate drops 3% today. What is your prediction to exchange rate in the short-term according to IRP theory?

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