Question: (Ch. 8) Forecasting the Future Spot Rate Based on IFE. Assume that the spot exchange rate of the South African rand (ZAR) is USD .06.

(Ch. 8) Forecasting the Future Spot Rate Based on IFE.

Assume that the spot exchange rate of the South African rand (ZAR) is USD .06. The 180-day interest rate (annualized) is 1% in the United States and 6% in South Africa. What will the spot rate ZARUSD be in 6 months, according to the IFE? (You may use the approximate formula to answer this question.) (6 points)

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