Question
If the interest rates are .02 and .05 in Argentina and Canada respectively, what will happen to the peso versus the Canadian dollar, if presently
If the interest rates are .02 and .05 in Argentina and Canada respectively, what will happen to the peso versus the Canadian dollar, if presently they exchange as 100 pesos for one dollar? Explain the principle holding true here with the aforementioned problem.
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Step: 1
The principle at play here is the interest rate parity IRP theory which suggests that in an efficien...
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International Economics
Authors: Robert C. Feenstra, Alan M. Taylor
5th Edition
1319218504, 9781319218508
