Suppose Namibia only trades with the countries given below.

Trade volume ($000's)

Partner

1 South Africa 4,011,950

2 United Kingdom 1,056,915

3 Netherlands 223,960

4 China 3,212,700

5 United States 320,370

Bilateral exchange rate for Namibian dollar

Year USD GBP Euro Yuan

2015 12 19 14 2

2016 14 19 16 2

2017 13 17 14 1

2018 13 17 15 1

2019 14 18 16 2

CPI (2010=100)

Country Name

Year Nam Neth SA UK USA China

2015 128 109 130 110 108 114

2016 137 110 138 112 110 117

2017 146 111 146 114 112 119

2018 152 112 152 117 115 121

2019 157 115 158 119 117 125

(Note: Namibian Dollar is pegged 1:1 with the South African Rand)

Use the given information to answer the following questions:

1) Calculate the nominal exchange rate index for each currency. (5marks)

2) Calculate the PPP implied exchange rates for all currencies. (5 marks)

3) Calculate the nominal effective exchange rate index for the Namibian dollar. (5 marks)

4) Calculate the bilateral real exchange rate for each currency. (5 marks)

5) Calculate the real effective exchange rate index for the Namibian dollar.