Calculate the new spot exchange rate that should result

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Problem 1: Suppose that the current spot exchange rate of the USA and New Zealand, US$/NZ$, is 0.6750 and that the inflation rate in both countries is 0 percent. Tomorrow new figures are released which indicate that the September quarter 2020 inflation is 1.1 percent in New Zealand and 0.6 percent in the United States, respectively. Calculate the new spot exchange rate of US$/NZ$ that should result from the difference in inflation rates.

Reference no: EM132752134

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