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According to PPP , % change in the spot exchange rate = ( 1 + Home inflation rate ) / ( 1 + foreign inflation
According to PPP
change in the spot exchange rate
Home inflation rateforeign inflation rate
US inflation rateBritish inflation rate
Please enter whole numbers according to the problem
So pound will appreciate or depreciate by
If we use the approximated form,
change in the spot exchange rate
Home inflation rateforeign inflation rate
Please enter a whole number according to your calculation
This is very close to the from the exact formula.
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