Exchange rate between riyal and the dollar

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Reference no: EM132242253

Suppose Country X has a currency called Riyal (R). At the beginning of the year, the exchange rate between Riyal and the U.S. dollar was R3.750/$. The inflation rate in Country X was running during the year at an annual rate of 10 percent, whereas the inflation in the U.S. was running at 2 percent.

a. Compute the new exchange rate between Riyal and the dollar at the end of the year. You must show the calculations to get credit.

b. Which currency had depreciated at the end of the year? Explain.

Reference no: EM132242253

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