In the foreign exchange market between the Brazilian real and the U.S. dollar, if U.S. interest rates fall relative to Brazilian interest rates, the Brazilian real will appreciate relative to the U.S. dollar.

Question

Quizplus · Accepted Answer

When U.S. interest rates fall relative to Brazilian interest rates, investors may seek higher returns by investing in Brazil, increasing demand for the Brazilian real and causing it to appreciate relative to the U.S. dollar.

In the Foreign Exchange Market Between the Brazilian Real and the U.S