If the Australian interest rate differential falls,then the exchange rate

Question

Quizplus · Accepted Answer

If the Australian interest rate differential falls, it means that the interest rate in Australia has decreased compared to other countries. This will make Australia a less attractive destination for foreign investors, who will look for higher returns in other countries with higher interest rates. As a result, the demand for the Australian dollar will decrease, leading to a decrease in the exchange rate. Therefore, the exchange rate will definitely fall in this scenario.

If the Australian Interest Rate Differential Falls,then the Exchange Rate