Foreign currency analysis of a company Situation: Euro, Renminbi and Yen are the most exposed to the company.

Provide the forecasts of the company using purchasing power parity and international fisher effect approaches against the US dollar and explain how you can see from the each perspective of the PPP, IFE, and forward rate.

This is the exchange rate forecast (not sure if it's correct)

Expected change in the USA value
		EUR/USA		CNY/USA		JPY/USA
IFE		118.79%		0.56%		188.50%
PPP		120.95%		14.54%		95.64%
Forward rate		1.1817		0.1511		0.9384

Answer rating: 100% (QA)

P urch asing Power Par ity PP P The P PP approach suggests that exchange rates between two currencies tend to adjust in order to ensure that the price of goods and services remain the same when expres... View the full answer