Question: The current spot exchange rate is $ 0 . 0 4 7 per Mexican peso. Assume that the real interest rate is 2 % everywhere,

The current spot exchange rate is $0.047 per Mexican peso. Assume that the real interest rate is 2% everywhere, and that the annual nominal interest rate is 3.4% in the U.S. and 5.9% in Mexico. What is the approximate expected percentage change in the exchange rate (measured in U.S. dollars per Mexican peso) according to the international Fisher effect?

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