Purchase Power Parity Illustration 10


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You are given the following information:

Spot rate: Rupees 44.0000 = $1

Inflation rates: US – 3%, India – 9%

(a)    Calculate 3 month forward USD INR rate.

(b)   If 3 month forward rate: Kenyan Schilling 80 = $1

Calculate the 3 month INR KES forward rate.

(Ans.: USD INR 44.6551 and INR KES 1.7915)


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