2. Go to FRED and find data on the daily dollar exchange rates for the euro (DEXUSEU), British pound (DEXUKUS), and Japanese yen (DEXJPUS). Also find the data on the daily three-month London Interbank Offer Rate (LIBOR) for the United States dollar (USD3MTD156N), euro area (EUR3MTD156N), British pound (GPB3MTD156N), and Japanese yen (JPY3TD156N). LIBOR is a measure of interest rates denominated in each countrys respective currency.

a. Calculate the difference between the LIBOR rate in the U.S. and the rates in the three other countries from January 1, 2019, to March 1, 2020.

b. Based on the interest rate differentials, would you have expected the dollar to depreciate or appreciate with respect to the other countries?

c. Report the percentage change in the exchange rates over the given time period. Are the results you predicted in part (b) consistent with the actual exchange rate?