As illustrated in the graph, the Argentine peso moved from its fixed exchange rate of Ps1.000/$ to over Ps2.00/$ in a matter of days in early January 2002. After a brief period of high volatility, the pesos value appeared to settle down to a range varying between 2.0 and 2.5 pesos per dollar. If you were forecasting the Argentine peso further into the future, how would you use the information in the graphthe value of the peso freely floating in the weeks following devaluationto forecast its future value?

Daily Exchange Rates: Argentine pesos = 1.00 USD 2.25 2.00 1.75 1.50 1.25 1.00 0.75 13 20 Feb 2002 9 16 23 30 6 27 26 2 Jan 2002