According to the international Fisher effect, if investors in all countries require the same real rate of return, the differential in nominal interest rates between any two countries:

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According to the international Fisher effect, the differential in nominal interest rates between any two countries is due to their inflation differentials. If investors in all countries require the same real rate of return, then the nominal interest rates in a country will adjust to compensate for the expected inflation rate. Therefore, the difference in nominal interest rates between two countries reflects the difference in their expected inflation rates.

According to the International Fisher Effect, If Investors in All