1. Assume the following information: 1-year interest rate on U.S. dollars = 5.5% 1-year interest rate on Singapore dollars = 11% Spot rate of Singapore dollar = 0.46 USD/SGD If interest rate parity is in effect, what should be the 1 year forward rate on the SGD
2. The inflation rate in U.S. is 2.9%, and the inflation rate in Japan is 9.6%. The current exchange rate is 99 JPY/USD. If the purchasing power parity holds, what should be the new JPY/USD exchange rate at the end of the year? Note that an indirect exchange rate is provided.