Question: Suppose the current spot FX rate is S = NOK 0.9600/SEK. The consensus long-term forecast for Norwegian inflation is 4.10% per year, while the

Suppose the current spot FX rate is S = NOK 0.9600/SEK. The

Suppose the current spot FX rate is S = NOK 0.9600/SEK. The consensus long-term forecast for Norwegian inflation is 4.10% per year, while the long-term forecast for Swedish inflation is 4.25% per year. 1) Which currency do you expect to appreciate? Why? 2) Estimate the spot FX rates which will obtain for the next That is, estimate (in NOK/SEK) S1, S2, S3, S4, five years. and S5.

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