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Assume that the Mexican peso exhibits a 6-month interest rate of 6 percent, while the U.S. dollar exhibits a 6-month interest rate of 5 percent.

Assume that the Mexican peso exhibits a 6-month interest rate of 6 percent, while the U.S. dollar exhibits a 6-month interest rate of 5 percent. From a U.S. investors perspective, the U.S. dollar is the home currency. Then foreign currency expected to increase or decrease by about what percent, according to the international Fisher effect (IFE).

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