The year 1, year 2 and year 3 forecasts for the rate of inflation in Sweden are 4%, 6% and 8% respectively. Suppose also that the year 1, year 2 and year 3 forecasts for the rate of inflation in Portugal are 13%, 12% and 11% respectively? If the expected spot rate between the Swedish Krone (SEK) and the EUR is EURO.0881/SEK at the end of year 3, What is the current spot rate?

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The year 1 year 2 and year 3 forecasts for the rate of inflation in Sweden are 4 6 and 8 respectivel... View the full answer