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It is now the beginning of year 2022. The spot bid rate for the US...

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Accounting

It is now the beginning of year 2022. The spot bid rate for the US Dollar is TZS2,240 while
the spot bid - ask spread is TZS15. A forecaster provides the following forecasts for the
bid-ask spread and inflation rates for Tanzania and United States in the next four years.
Page 3 of 4
YEAR 2023202420252026
BID-ASK SPREAD [TZS]23273025
FORECAST RATE OF
INFLATION
TANZANIA
6%5%4%3.5%
UNITED STATE 3.5%3%3%2.5%
REQUIRED:
On the basis of the bid-ask spread forecasts and the theory of PPP determine the
expected exchange rates and the percentage bid ask-spread for the years 2023-2026.

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