Solution-Estimate the spot exchange rates in terms of AUD

Estimate the spot exchange rates in terms of AUD

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Question - After the graduation, you expect to become a foreign exchange dealer. Your curiosity about the behaviour of foreign exchange markets encourages you to conduct research on purchasing power parity theory. Your research outcomes in relation to gold and foreign exchange market are as follows:

Given prices of gold and the absolute purchasing power parity theory (APPP), estimate the spot exchange rates in terms of AUD for CNY as at 1st October?

Country	AUD	China
Price of Gold Oz as at 1^st October 2019	AUD1,715.52	CNY8,768.19
Predicted price-level changes in the six-month period started at 1^st October 2019	1.23%	2.80%
Spot exchange rate as at 1st October 2019	AUD0.1912/CNY
Spot exchange rate as at 31^st March 2020	AUD0.1840/CNY

Reference no: EM133187393

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Estimate the spot exchange rates in terms of AUD

Reference no: EM133187393

Reference no: EM133187393

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