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Assume the following; 1. The interest rate in the Euro area is 4%; 2. The interest rate in Japan is 2%; 3. The current nominal exchange rate is 165 (€1 = 165 Yen); 4. The expected nominal exchange

Assume the following;

1. The interest rate in the Euro area is 4%;

2. The interest rate in Japan is 2%;

3. The current nominal exchange rate is 165 (€1 = 165 Yen);

4. The expected nominal exchange rate next year is 155.

Using the information above answer the following question:

What is the expected rate of appreciation or depreciation of the Euro? (precede the number with a + or minus to denote appreciation or depreciation, respectively, and use 2 decimal places - e.g +0.12 to mean an appreciation of 12%)

Jun 06 2021 View more View Less

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