Calculating PPP implied EUR/USD Exchange Rates
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Chase Econometrics has just published projected inflation rates for the United States and Euro-zone for the next five years. U.S. inflation is expected to be 2% per year, and Euro-zone inflation is expected to be 3.5% per year. If the current exchange rate is EUR/USD 1.4500, what should the expected PPP implied EUR/USD exchange rates be five years from now?
A. 1.3479
B. 1.5597
C. 1.4289
D. 1.4713
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Solution Summary
This solution depicts the steps to calculate PPP implied EUR/USD exchange rates in the given case.
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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