Lets say your given the spot rate, such as .9 $/euro, as well as the forward rate and both interest and inflation numbers for the 2 currencies countries. If you are asked to determine if there is any mispricing and if there is what the arbitrage profits would be, do you use interest rates or inflation rates to determine the forward rate? Even if the international fisher relation holds, unless the inflation and interest rates are equal won’t it come up with different forward rates?
if the interest rate given is nominal then i would just use the interest rate or else i would convert the real interest rate to nominal and then find the forward rate. if nominal or real is not stated then i would assume nominal and fold my arms and pray.