Find the market long run expectation

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Question: Suppose that the nominal interest rates in the U.S. and Mexico are, respectively, 6% and 10%, the real interest rate is 3% in the U.S. and 5% in Mexico, and the real exchange rate is fixed in both countries. Find the market's long run expectation about the number of Mexican pesos to be received for a U.S. dollar (in terms of percentage change).

Reference no: EM132208250

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