According to the ife, when the nominal interest rate at home exceeds the nominal interest rate in the foreign country, the home currency should depreciate.

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asked Jun 8, 2018 136k views

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John Wiegley · Answer 1 · 2018-06-13T07:38:13+0000

If interest rate parity holds, and the international Fisher effect (IFE) holds, foreign currencies with relatively high interest rates should have forward discounts and those currencies would be expected to depreciate is a true statement.

According to the ife, when the nominal interest rate at home exceeds the nominal interest rate in the foreign country, the home currency should depreciate.

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