If a foreign currency consistently depreciated against the dollar over several periods and had lower interest rates at the beginning of those periods than the U.S. interest rates, then:

Question

Quizplus · Accepted Answer

The depreciation of the foreign currency and lower interest rates suggest that U.S. firms would not achieve a higher yield on foreign deposits. The international Fisher effect, which suggests that currencies with lower interest rates will depreciate, is not supported if the currency consistently depreciated.

If a Foreign Currency Consistently Depreciated Against the Dollar Over