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I am a bit confuse about the forward rate and expected spot rate when I am studying for the interest rate parity and purchasing power parity.
If we are forecasting a future spot rate then we use purchasing power parity to get an estimate (on the basis that although many factors can affect the spot rate, inflation rates are the one factor that we actually know about).
Forward rates are always determined using interest rate parity because it has to have the same effect as money market hedging.
I do explain all of this in detail in my free lectures.
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