Which of the following will NOT trigger inward uncovered arbitrage?

Question

Quizplus · Accepted Answer

Uncovered interest arbitrage involves capital moving from one currency to another to take advantage of the differences in interest rates, under the expectation that the exchange rate will move to offset these differences. Option D describes a situation where the expected depreciation of the domestic currency is greater than the interest rate differential, which would discourage moving capital into the foreign currency as the expected exchange rate movement would more than offset the interest rate advantage, thus not triggering inward uncovered arbitrage.

Which of the Following Will NOT Trigger Inward Uncovered Arbitrage