The Fisher effect (Chapter 6) suggests that nominal interest rates differ between countries because of differences in the respective rates of inflation. According to the Fisher effect and your examination of the one-year Eurocurrency interest rates presented in Exhibit 11.3, order the currencies from the eight countries from highest to lowest in terms of the size of the inflation premium embedded in the nominal interest rates for June 2, 2010.

Exhibit 11.3

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Eurocurrency Interest Rate Quotations: June One Month 0.52-0.27 1.05-0.55 2, 2010 Six Months 0.95-0.84 1.30-0.80 1.13-0.93 EXHIBIT 11.3 7 Days' Notice Three Months One Year Short Term 0.37-0.27 0.75-0.25 0.34-0.24 0.84-0.34 0.60-0.35 0.11-0.01 0.57-0.47 1.20-0.70 0.68-0.60 1.25-1.15 1.80-1.30 1.49-1.19 0.47-0.28 2.22-1.95 1.62-1.36 0.75-0.67 0.75-0.60 Euro Danish Krone Sterling Swiss Franc Canadian Dollar US Dollar Japanese Yen Singapore $ 0.55-0.45 0.70-0.50 0.15-0.05 0.95-0.55 0.07-0.03 0.24-0.01 0.33-0.13 1.68-1.00 1.30–0.73 1.06–0.80 0.47-0.32 0.45-0.30 0.19-0.03 0.87-0.60 0.65-0.45 0.39-0.27 0.80-0.60 0.36-0.28 1.42-1.10 0.52-0.44 0.50-0.35 0.50-0.30 0.60-0.43 0.20-0.01 0.21-0.10 0.32-0.17