Suppose now that country B wants to discourage the conversion of its currency into currencies of other countries, includ

[answerhappygod]

Suppose now that country B wants to discourage the conversion of
its currency into currencies of other countries, including the
country A currency. To achieve this, country B imposes a tax of 5%
on the conversion of country B currency into country A currency.
Using the values of the nominal interest rates, and the current and
expected nominal exchange rates found in subquestion (a) above,
state whether the current nominal exchange rate satisfies the UIP
condition after the tax is imposed. If not, describe what is the
value of the current nominal exchange rate that will make the UIP
condition hold, the economic reasons why this value will be
reached, and the economic reasons why this value is different (if
at all) than the corresponding value you found in subquestion (a)
above (maximum 200 words).