According to the interest parity condition,if the domestic interest rate is 12 percent and the foreign interest rate is 10 percent,then the expected appreciation of the foreign currency must be 2 percent.

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The interest parity condition states that the difference in interest rates between two countries is equal to the expected change in exchange rates. If the domestic rate is 12% and the foreign rate is 10%, the foreign currency is expected to appreciate by 2% to offset the interest rate differential.

According to the Interest Parity Condition,if the Domestic Interest Rate