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After you explain the argument behind the interest rate parity relation to a recruiter, she unexpectedly responds by telling you that this relationship cannot possibly
After you explain the argument behind the interest rate parity relation to a recruiter, she unexpectedly responds by telling you that this relationship cannot possibly be right: Look, she says this relationship implies that when US interest rates rise, the future price of the Yen increases, meaning that the Yen will appreciate in the future. However, we know that an increase in the US interest rate should strengthen the dollar relative to the Yen. This cannot be right. Explain what is wrong with the recruiters argument.
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