Consider the case where the domestic and foreign interest rate both rise, but with the latter increasing by a greater degree (that is, the change inR*> change inR). With expectations held constant, what does uncovered interest parity imply for the expected change in the exchange rate?

Select one:

a.It can either appreciate or depreciate.

b.Unambiguously appreciate.

c.Neither appreciate nor depreciate (remain constant).

d.Insufficient information to determine.

e.Unambiguously depreciate.