As of today, assume the following information is available:

U.S. Singapore

Real rate of interest required

by investors 3% 3%

Nominal interest rate 9% 13%

Spot rate $.74

Oneyear forward rate $.72

Use the forward rate to forecast the percentage change in the Singapore dollar over the next year.

Use the differential in expected inflation to forecast the percentage change in the Singapore dollar over the next year (using the exact formula).

Use the spot rate to forecast the percentage change in the Singapore dollar over the next

year.