Forward rate is used as a forecast

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Reference no: EM131541412

Assume that interest rate parity holds. The U.S. five-year interest rate is 0.06 annualized, and the Mexican five-year interest rate is 0.04 annualized. Today’s spot rate of the Mexican peso is $0.24. What is the approximate 10-year forecast of the peso’s spot rate if the 10-year forward rate is used as a forecast?

Reference no: EM131541412

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