What must be the spot exchange rate

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Reference no: EM131014133

If interest parity holds and the interest rate in the U.K. is 6 percent, the interest rate in the US is 4.5 percent, and the one-year forward exchange rate is 1.75 dollars per British pound, what must be the spot exchange rate?

Is the U.S. dollar expected to appreciate or depreciate against the British pound?

Reference no: EM131014133

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