Evaluate exchange rate against the russian ruble, International Economics

Assignment Help:

Q. Suppose Russia's inflation rate is 200% over one year, but the inflation rate in Switzerland is only 2%. According to relative PPP, what should happen over the year to the Swiss franc's exchange rate against the Russian ruble?

Answer: The exchange rate among the rubble and the franc at time t - The same exchange rate at time t-1 the exchange rate among the rubble and the franc at time t = 2 - 0.02 =1.98.

Thus there will be a 198% depreciation of the ruble alongside the franc otherwise, conversely a198% appreciation of the franc against the ruble.


Related Discussions:- Evaluate exchange rate against the russian ruble

Issues involved with the fed acting, Q. Explain the issues involved w...

Q. Explain the issues involved with the Fed acting as a lender of Last Resort (LLR). Answer: On the one hand LLR make possible the Fed to avoid panic and disturbance to

Ppp theory with regard to the real exchange rates, Q. What are the pr...

Q. What are the predictions of the PPP theory with regard to the real exchange rates? Answer: The real exchange rate among two countries is a broad summary measure of

Benefits enjoyed by indian companies, "1. Describe the important benefits e...

"1. Describe the important benefits enjoyed by Indian companies through TRIPs. Elaborate the main objectives of WTO in global economy. 2. "Leontiff paradox is proved in the Indian

What are the rationales for interest and currency swaps, Question : (a)...

Question : (a) What are the rationales for interest and currency swaps? (b) Suppose a Swiss firm, SandyCom Ltd, wants to invest in the U.S. The Swiss firm needs US dollars

Explain purchasing power parity, Explain Purchasing Power Parity.   An...

Explain Purchasing Power Parity.   Answer:  PPP ( ) states that the exchange rate between two countries' currencies equals the ratio of the countries' price levels. A decr

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd