If the German interest rate is 4% and the U.S.interest rate is 5%,what is the expected change in the value of the dollar in terms of the euro?

Question

Quizplus · Accepted Answer

The expected change in the value of the dollar in terms of the euro is approximately equal to the interest rate differential between the two countries. Since the U.S. interest rate is 1% higher than the German interest rate, the dollar is expected to depreciate by about 1% relative to the euro.

If the German Interest Rate Is 4% and the U