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4. The dollar Mexican peso rate is $0.13 per peso right now. The expected inflation rate in the United States is 3%, while the corresponding
4. The dollar Mexican peso rate is $0.13 per peso right now. The expected inflation rate in the United States is 3%, while the corresponding inflation rate in Mexico i 35% a. Estimate the expected spot rate one year from now. b. If expected inflation rates remain unchanged, esti- mate the expected spot rate two years from now. c. Now assume that the expected inflation rate in the second year will drop to 20% in Mexico, while remaining at 3% in the United States. Estimate the expected spot rate two years from now
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