Evidence from the United States during the period 1973-2010 indicates the correspondence between nominal interest rates and exchange rate movements is

Question

Quizplus · Accepted Answer

The evidence suggests that the correspondence between nominal interest rates and exchange rate movements is not as close as that between real interest rates and exchange rate movements. This means that changes in real interest rates have a stronger impact on exchange rates than changes in nominal interest rates.

Evidence from the United States During the Period 1973-2010 Indicates