Given a home country and a foreign country, the international Fisher effect (IFE) suggests that:

Question

Quizplus · Accepted Answer

The International Fisher Effect (IFE) theory suggests that the currency of the country with the higher nominal interest rate will depreciate against the currency of the country with the lower nominal interest rate, due to expected inflation differences. It does not imply that nominal interest rates, inflation rates, or exchange rate movements against other currencies will be the same between two countries.

Given a Home Country and a Foreign Country, the International