Suppose domestic interest rates are at 4.55%, while foreign returns are bringing 6.38%. According to the asset approach, if the expected future exchange rate is three dollars per unit of foreign currency, what can we say about the current spot rate if UIP holds?

Question

Quizplus · Accepted Answer

The Answer of Suppose domestic interest rates are at 4.55%, while foreign returns are bringing 6.38%. According to the asset approach, if the expected future exchange rate is three dollars per unit of foreign currency, what can we say about the current spot rate if UIP holds?

Suppose Domestic Interest Rates Are at 4