The current spot exchange rate between the Japanese yen and the Canadian dollar is Y 105/$. The yen is expected to appreciate by 5% against the dollar over the next six months. What do you expect the spot exchange rate between the yen and the dollar to be six months from now?

Question

Quizplus · Accepted Answer

If the yen is expected to appreciate by 5% against the dollar over the next six months, then the new spot exchange rate can be calculated as:
Y 105/$ x 1.05 = Y 110.25/$
Therefore, in six months, the spot exchange rate is expected to be Y 110.25/$.

The Current Spot Exchange Rate Between the Japanese Yen and the Canadian