Assume that the Australian interest rate is 2% higher than the US interest rate. Then funds will flow out of Australia to the US and cause the AUD to depreciate.

Question

Quizplus · Accepted Answer

When the Australian interest rate is higher than the US interest rate, funds are more likely to flow into Australia to take advantage of the higher returns, which would typically cause the AUD to appreciate, not depreciate.

Assume That the Australian Interest Rate Is 2% Higher Than