Assume that one$-$year interest rates are $4\mathrm{.}40\%$ in the United States and $3\mathrm{.}75\%$ in the euro zone. The

spot rate between the euro and the dollar is $0\mathrm{.}8250/$$$.$ Assuming the international Fisher effect

holds, what should the $/$$ exchange rate be one year hence?

Assumptions Value

One year interest rate, US dollars $($$$)-4\mathrm{.}400\%$

One year interest ratre, euros $()-3\mathrm{.}750\%$

Current spot exchange rate $(/$$$)-0\mathrm{.}8250$