Suppose that U.S. inflation over the next five years turns out to average 3.2%, Eurozone inflationaverages 1.5%, and the exchange rate in five years is $0.99/€. What has happened to the real value of the euro over this five-year period?Hence, even though the euro has appreciated in nominal terms over this five-year period, it has fallen in real terms by 4.09% [(0.9111 - 0.95)/0.95].