Capital market that the annual inflation rate

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Reference no: EM131518782

In October 2013, there is a consensus in the capital market that the annual inflation rate is likely to be 3.5% in US and -1.5% in China for the next two years. Based on this information, answer the following questions regarding your prediction on foreign exchange rate.

If the spot exchange rate is CNY6.5/$ in October 2013, using the exact version of the PPP, the expected spot rate in October 2014 (one year from 2013) is CNY /$. (Please use indirect quote and leave 3 decimal points

Reference no: EM131518782

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