FX Parity Relations and Forecasting

      1.Select 3 countries, from at least two continents.2.Begin research at the Bank of International Settlement to locate the website for the Central Banks of each of your three countries. www.bis.org tab “Central Bank Hub”.  Each country’s Central Bank should be the primary data source for this Part 1 of the Case Study Project.3.Calculate the cross-rates from these three Exchange Rates.  4.Calculate the 3 month Forward Exchanges for each currency in relationship to the other two currencies using Interest Rate Parity Theory.5Take a closer look at the notion of “Real Interest” by estimating the Forward Exchanges using the relative inflation rates among the three countries.Interest Rates are forward conditioningiI(CND)/i(US) = (r+P*/P(CND))/(r+P*/P((S))  Therefore CND/USD =I(CND)/I(US) = (P*/P(CND))/(P*/P(USD))6. Summarize from your various calculations the general trend forecasted in the relative exchange rates, interest rates and inflation.