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Expected spot exchange rate-eur-usd

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The euro is currently quoted at EUR/USD 1.1215. Economists expect inflation for the next year (year 1) to be 0.9% in the United States and 0.8% in the euro zone. For the year after next (year 2), economists expect inflation to increase to 1.8% in the US, and be 1.2% in the eurozone. Using Purchasing Power Parity, what is the expected spot exchange rate, EUR/USD, two years from today (i.e., sport exchange rate at the end of year 2)?

Reference no: EM132485217

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