The current spot exchange rate between the Japanese yen and the U.S. dollar is 113.25 Y/US$. The yen is expected to appreciate by 4% against the dollar over the next year. What do you expect the spot exchange rate between the yen and the dollar to be one year from now?

Question

Quizplus · Accepted Answer

To find the expected spot exchange rate one year from now, we need to calculate the yen's new value based on the 4% appreciation.

1.04 x 113.25 Y/US$ = 117.81 Y/US$

Therefore, we expect the spot exchange rate between the yen and the dollar to be 108.89 Y/US$ (rounded to two decimal places) one year from now.

The Current Spot Exchange Rate Between the Japanese Yen and the U.S