Okan Co PPP spot rate

This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.

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October 5, 2024 at 6:09 am #712092
Seetsa
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I would like to ask, I thought when calculating calculating future exchange rates the inflation rate for base country becomes the denominator and that of a foreign country becomes numerator, but I am confused why it has been done differently in the Okan Co question
October 5, 2024 at 8:28 am #712098
John Moffat
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The ‘base’ currency is the currency against which the other is being quoted.

Here, the rate is quoted as Y$3.03 = GBP1, so GBP is the ‘base’ country for the formula.

Have you watched my free lectures on forecasting future spot rates?
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