You read a report in IMF Bulletin that the Singapore and Brazil inflation rates for the next 1-year period is 2.6% and 25.0%, respectively. As of today, the exchange rate between the Brazilian real and Singapore dollar is R$1.95/S$. i. Based on purchasing power parity (PPP), explain what may be the reason for the big difference between inflation rates in the two countries? [2 marks] ii. Which currency will see bigger depreciation of its value? Predict the depreciation of that currency based on absolute PPP. [3 marks] E ili. Infer the exchange rate between the two currencies next year? [3 marks] You read a report in IMF Bulletin that the Singapore and Brazil inflation rates for the next 1-year period is 2.6% and 25.0%, respectively. As of today, the exchange rate between the Brazilian real and Singapore dollar is R$1.95/S$. i. Based on purchasing power parity (PPP), explain what may be the reason for the big difference between inflation rates in the two countries? [2 marks] ii. Which currency will see bigger depreciation of its value? Predict the depreciation of that currency based on absolute PPP. [3 marks] E ili. Infer the exchange rate between the two currencies next year? [3 marks]