The expected return on dollar deposits in terms of dollars, R^D, is

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The expected return on dollar deposits in terms of dollars, R^D, is always the interest rate on dollar deposits, i^D, for any exchange rate. This is because the return on a deposit is determined by the interest rate offered by the bank, which is fixed in terms of dollars. Exchange rates may affect the return in terms of other currencies, but not in terms of dollars.

The Expected Return on Dollar Deposits in Terms of Dollars