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The Hong Kong dollar is currently pegged to the US dollar at a rate of 7.80 HKD/USD. Suppose that the peg will either hold over

The Hong Kong dollar is currently pegged to the US dollar at a rate of 7.80 HKD/USD. Suppose that the peg will either hold over the next year, or the HKD will appreciate such that the exchange rate will be 6.25 HKD/USD in one year. The current 1-year USD interest rate is 1.475% per annum and the 1-year HKD interest rate is 1.0725% per annum. 


If UIRP holds, what percentage probability does the market attach to the revaluation of the HKD?

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