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Today's spot rate of the British pound is $ 1 . 5 9 . Assume that purchasing power parity holds. The U . S .

Today's spot rate of the British pound is $1.59. Assume that purchasing power parity holds. The U.S. inflation rate over this year is expected to be 8%, while the UK inflation over this year is expected to be 5%. Determine the expected spot rate of pound in one year.

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