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what is the basic use of these two formulas and where are we required to use them?
Purchasing power parity is used to estimate future spot exchange rates (on the basis that one factor that affects exchange rates is the relative inflation rates between the two countries).
Interest rate parity is used to calculate forward rates (on the basis that forward rates are determined by relative interest rates because it is effectively the same as money market hedging).
Both of these are explain in full in my lectures, both on foreign exchange rate risk management and on predicting future exchange rates.
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