Consider the short-run asset approach to exchange rates. Assume at present both home and foreign country have a price level equal to 1 and the spot exchange rate E is equal to 1. and there is no inflation in either country.The world real interest rate r* is equal to 6%.

A permanent increase in the money supply of 3 % lowers the home interest rate to 3 %.

What is the immediate impact of the increase in money supply on the spot exchange rate?