Frank Wright, an international fund manager, uses the concepts
of purchasing power parity (PPP) and the International Fisher
Effect (IFE) to forecast spot exchange rates. James gathers the
financial information as follows:
Current rand spot exchange rate
$0.060
Expected annual U.S. inflation
6%
Expected annual South African inflation
8%
Expected U.S. one-year interest rate
0.08%
Expected South African one-year interest rate
1%
Calculate the following exchange rates (ZAR and USD refer to the
South African rand and U.S. dollar, respectively)....