Question: Current Spot Rate = JPY 89.00/$ 1 Year Forward Rate = JPY 84.90/$ Inflation Japan = 1.10% InflationUS - 5.90% InterestRate Japan - 4.70% InterestRateUS

Current Spot Rate = JPY 89.00/$ 1 Year Forward Rate = JPY 84.90/$ Inflation Japan = 1.10% InflationUS - 5.90% InterestRate Japan - 4.70% InterestRateUS - 9.50% Using a relative purchase price parity approach, calculate what the 1 year forward rate should be? 84.97 84.90 84.73 85.10

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