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The following are expected inflation rates and interest rate changes for the respective currencies: Factor US Australia Malaysia Currency Dollar Australian Dollar Ringitt Change in
The following are expected inflation rates and interest rate changes for the respective currencies: Factor US Australia Malaysia Currency Dollar Australian Dollar Ringitt Change in interest rates -5% -3% -2% Change in inflation rates -796 -496 +3% Suppose the foreign exchange flows between the US and Australian, and Australia and Malaysia are primarily trade- related, while flows between the US and Malaysia are predominantly financial in nature. Obtain predictions of the 3 exchange rate movements (i.e., predict the appreciation or depreciation of one currency against another)
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