What is the expected exchange rate one year from now, Finance Basics

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What is the expected exchange rate one year from now

Problem

Assume $1 is currently equal to A$1.2924 in the spot market. Also assume the expated inflation rate in Australia is 4% as compared to 2.4% in the US. What is the expected exchange rate one year from now if relative purchasing power parity exists?

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Finance Basics: What is the expected exchange rate one year from now

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