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Suppose the expected exchange rates are the average expectations by investors of exchange rates in one year. Imagine that the interest rates are for

Suppose the expected exchange rates are the average expectations by investors of exchange rates in one year. Imagine that the interest rates are for equally risky assets and are annual rates. United states Australia Singapore Current exchange rate Expected exchange rate 1.98 A$/US$ 1.93 S$/US$ 2.09 A$/US$ 1.82 S$/US$ Current interest rate (%) 3.0 5.0 2.0

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