A nation whose interest rate is rising more rapidly than interest rates in other nations can expect the international value of i

Question

Murljashka [212]

2 years ago

10

A nation whose interest rate is rising more rapidly than interest rates in other nations can expect the international value of i

ts currency to appreciate.

Business

1 answer:

Pavlova-9 [17] · Answer 1 · 2022-05-17T18:36:36+03:00

Answer:

true

Explanation:

The exchange rate is the rate at which one currency is exchanged for another currency

If interest rate is higher in a country compared to other countries, investors would be interested in investing in that country because they would earn a higher return for their investment.

As a result of the higher flow of funds into the economy with the higher interest rate, the demand for the country's currency increases. If the demand increases relative to supply, the value of that currency relative to other currencies increases and its exchange rate increases. this is what is referred to as currency appreciation