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Between 2002 and 2004, when 1-year interest rate in the euro zone were 120 basis points higher than U.S. rate, on average, we should have
Between 2002 and 2004, when 1-year interest rate in the euro zone were 120 basis points higher than U.S. rate, on average, we should have expect according to the interest parity a depreciation of the euro, whereas in fact it appreciated 46 percent against the dollar over the same period. How do you explain that deviation from the interest parity?
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