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Explain how purchasing power parity and international Fisher effect are used to forecast future or forward...

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Finance

Explain how purchasing power parity and international Fishereffect are used to forecast future or forward currency exchangerates between two countries.

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1 Per the Purchasing Power Parity Theory the forward rate is given by the formula F S1ih1if where F the forward rate S the spot rate ih inflation rate in the home country and if inflation rate in the foreign country whose currency is bought or sold Thus changes in    See Answer
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Explain how purchasing power parity and international Fishereffect are used to forecast future or forward currency exchangerates between two countries.

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