Suppose that u. s. interest rates are 4 percent more than rates in the european union. would you expect the dollar to appreciate or depreciate against the euro, and by how much?

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Business

Tia

30 June, 13:21

Suppose that u. s. interest rates are 4 percent more than rates in the european union. would you expect the dollar to appreciate or depreciate against the euro, and by how much?

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Mathew · Answer 1

I think the Dollar will appreciate against the Euro.

Higher interest rate will create stronger currency because investor now became really interested to invest in that country.

As for the amount it will be 4 % x the difference in strength now.