This is an essay problem-solving question. Q. The interest rate for the Mexican peso (MXN) is 6%, while the interest rat

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answerhappygod
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This is an essay problem-solving question. Q. The interest rate for the Mexican peso (MXN) is 6%, while the interest rat

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This is an essay problem-solving question.
Q. The interest rate for the Mexican peso (MXN) is 6%,
while the interest rate for the U.S. dollar is 3%. Facing this
market situation, the Bank of Mexico is weighing a devaluation of
its currency by 5%. What is the probability that the devaluation
will occur? Assume that the UIRP is held true.
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