Question

The nominal interest rate is 9 percent in Brazil and 6 percent in Japan. Applying the international Fisher effect, the Brazilian real should

Answer 1

appreciate by 3%

Step-by-step explanation:

the international fischer effect states that the difference between the nominal interest rate of two countries is equal to the changes in the exchange rate of their currencies.

the country with the lower interest rate appreciates by the difference between the exchange rate.

9% - 6% = 3%

the Brazilian real should appreciate by 3%