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Calculate the nominal exchange rate

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Investors in the US and UK require the same real interest rate: 3.5%. The annual inflation rate is expected to be 6.5% in the USand 7.5% in the UK for the next two years. The current spot rate S($/£) = $1.18/pound Calculate the nominal exchange rate in US and UK, assuming the Fisher effect holds; the expected spot rate S($/ €) two years from now.

Reference no: EM133272750

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