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Spot exchange rate for the euro

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  1. Suppose the spot exchange rate for the euro two years ago was $1.25/€, while the spot exchange rate today is $1.20/€. Over the past two years, suppose that inflation in Euroland has been 4% per year, while inflation in the U.S. has been 1% per year. (20%)
  2. By how much has the euro appreciated or depreciated in nominal terms (i.e., in the market) over the past two years?

Is this correct?

1/1.25=.08EUR 1/1.20=.8334 EUR so .8334-.8/.8= +4.175%

Reference no: EM132021936

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