You may assume that there are open capitalmarkets, and that prices are sticky in the short run but perfectly flexible in the long run. For full marks, be sure to label any diagrams clearly and completely.

If the Thai interest rate is 0.5%, the U.S. interest rate is 2.5% and the expected dollar-baht exchange rate is Ee$/B = $0.01/B, what theory could you use to find the spot dollar-baht exchange rate E$/B? 

What is the value of the spot exchange rate according to the theory?