A,B&C

Argentine Float. The Argentine peso was fixed through a currency board at Ps1.00/5 throughout the 1990 s. In .lanuary 2002 , Ihe Argentine peso was floated. On January 29, 2003, it was trading at Ps3.16/S. During that one-year poriod, Argentina's inflation rate was 19% on an annualized basis Inflation in the United States during that same period was 2.4% annualized. a. What should have been the exchange rate in January 2003 if PPP held? b. By what percentage was the Argentine peso undervalued on an annualized basis? c. What were the probabie causes of undervaluation? a. What should have been the exchange rate in Janiary 2003 is PPP heid? The exchange rate in January 2003, if PPP heid, should have been Ps 5. (Round to five decimal places.) Argentine Float. The Argentine peso was fixed through a currency board at Ps1,00/5 throughout the 1990 s. In January 2002 , the Argentine peso was floafed. On January 29, 2003, it was trading at Ps3.16/S. During that one-year period, Argentina's inflation rate was 19% on an annualized basis. Inflation in the United States during that same period was 2.4% annualized. a. What should have been the exchange rate in January 2003 if PPP held? b. By what percentage was the Argentine peso undervalued on an annualized basis? c. What were the probable causes of undervaluation? a. What should have been the exchange rate in January 2003 if PPP held? The exchange rate in January 2003, if ppp held, should have been Py \$. (Round to five docimal places.)