The Argentine peso was fixed through a currency board at Ps1.00/$ throughout the 1990s. In January 2002 the Argentine peso was floated. On January 29, 2003, it was trading at Ps3.20/$. During that one year period Argentina ’ s inflation rate was 20% on an annualized basis. I nflation in the United States during that same period was 2.2% annualized. (10 credits) a. What should have been the exchange rate in January 2003 if purchasing power parity held? b. By what percentage was the Argentine peso undervalued on an annualized basis?