尉纤份贸易上孝 国际财务管理 综合案例 Exhibit 7 Japanese Yen:Percent Over/Under Valued vs.U.S.Dollar 50% 40 30 200 0 1000 0 7677787980818283843586878899091929394 Source:Cumency and Bond Market Trends (Merill Lynch:October 27,1994),p.22. a Estimates of over-and under-valued percentages are based on ong-run purchasing power parity estimates.The Purchasing Power Parity (PPP)theory of exchange rate detemmination holds that long-run trends in exchange rates are determined by cumulative differences in national inflation rates.Specifically,PPP maintains thatS=PP.where S is the spot exchange rate expressed as foreign cumrency per unit of domestic cuency,P is the foreign national price level,and P is the domestic national price level.Relative PPP stipulates thats=p-wheres is the rate of change in the exchange rate,and p,andare the national rates of inflation in the foreign and domestic cumencies,repectively.Currencies that weaken faster (or strengthen more slowly)than the rate justified by the difference in national inflation rates are said to be depreciating in real temms.Likewise, cumrencies that strengthen faster(or weaken more slowly)than the rate justified by the inflation rate difference are said to be appreciating in realtems. -10国际财务管理 综合案例 - 10 -