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Business, 10.03.2020 00:42 nickname9154

Assume that interest rate parity holds, and the euro's interest rate is 9 percent while the U. S. interest rate is 12 percent. Then the euro's interest rate increases to 11 percent while the U. S. interest rate remains the same. As a result of the increase in the interest rate on euros, the euro's forward will in order to maintain interest rate parity.

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