Question: What interest rate do we refer to when making exchange rate forecasts? Can I use the base rate to calculate in IRP theory? Is it

What interest rate do we refer to when making exchange rate forecasts? Can I use the base rate to calculate in IRP theory? Is it reasonable to use the one-year deposit rate as i in IFE?

Date Currency Spot Rate Estimated Theory / theories applied as at date Forward of record Rate 09 April HK$/E $10.2415 12 April HK$10.2415/E IRP (Base Rate) 13 April HK$9.7721/E PPP 14 April HK$10.2314/E IFE (One-year Deposit Rate)

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