In the spot market, $1 is currently equal to A$1.2389. The expected inflation rate in Australia is 5 % and in the U.S. 3.5 %. What is the expected exchange rate one year from now if relative purchasing power parity exists?

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The Answer of In the spot market, $1 is currently equal to A$1.2389. The expected inflation rate in Australia is 5 % and in the U.S. 3.5 %. What is the expected exchange rate one year from now if relative purchasing power parity exists?

In the Spot Market, $1 Is Currently Equal to A$1