Question
The following data and figure are provided: Table 1 : USD/CNY Exchange Rate Date USD/CNY Parity rate Closing rate (one day before) Implied dollar index
The following data and figure are provided:
Table 1: USD/CNY Exchange Rate
Date | USD/CNY Parity rate | Closing rate (one day before) | Implied dollar index |
26 Mar 2021 | 6.5376 | 6.5463 | |
25 Mar 2021 | 6.5282 | 6.5245 | 100 |
Suppose the USD/CNY rate is determined rigorously following the two pillar exchange rate policy, use the information of parity rate and closing rate (one day before) to back out the implied dollar index, and fill in your answer in the Table 1. You only need to provide the numbers for 26 Mar 2021.
Here is the two pillar policy, with wUSD= 0.2159
log(S-CP-t+1/S-CP-t)=0.5log(StCL/StCP)+0.5(1-wUSD)*log(Xt+1/Xt)
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