According to the IFE, when the nominal interest rate at home exceeds the nominal interest rate in the foreign country, the home currency should depreciate.

Question

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According to the International Fisher Effect (IFE), if the nominal interest rate of the home country is higher than the nominal interest rate of the foreign country, the home currency should depreciate in the long run. This is because higher interest rates attract foreign investors who demand more of the home currency, driving down its value.

According to the IFE, When the Nominal Interest Rate at Home