Question
Parity conditions Country Spot exchange rate (USD/foreign currency) Inflation rate 1-year interest rate Nepal USD/NPR 111.02 7.00% Botswana USD/BWP 10.589 3.20% Paraguay USD/PYG 5803.0 5.25%
Parity conditions
| Country | Spot exchange rate (USD/foreign currency) | Inflation rate | 1-year interest rate |
| Nepal USD/NPR | 111.02 |
| 7.00% |
| Botswana USD/BWP | 10.589 | 3.20% |
|
| Paraguay USD/PYG | 5803.0 | 5.25% | 4.10% |
| United States |
| 2.75% | 2.50 % |
1a. Forecast the expected exchange rate in nine months for the Botswanan pula.
b. What parity condition does this rely on?
2a. Forecast the expected exchange rate in six months for the Nepalese rupee.
b.What parity condition does this rely on?
3a. What is the expected one year forward rate for the Paraguayan guarani?
b. What parity condition does this reflect?
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Financial Markets And Institutions
Authors: Jeff Madura
5th Edition
0324027443, 9780324027440
