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Terrania is a fast growing economy that has productivity in tradables growing at 10% p.a. against productivity growth of 7% p.a. in its trading partner.

Terrania is a fast growing economy that has productivity in tradables growing at 10% p.a. against productivity growth of 7% p.a. in its trading partner. Assume tradables make up 25% of output. What prediction would you make about Terrania's real exchange rate trend?

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