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Homework answers / question archive / Quiz 5 In the usual FX market diagram with DR and FR curves where $ is the home currency and euro is the foreign currency, an increase in the foreign interest rate will of Select one: O a
Quiz 5 In the usual FX market diagram with DR and FR curves where $ is the home currency and euro is the foreign currency, an increase in the foreign interest rate will of Select one: O a. shift DR up. O b. appreciate euro relative to $. O c. shift DR down. O d. appreciate $ relative to euro.
Domestic Rates will remain constant. Show the DR Curve will be constant.
Now increase in the rate of foreighn currency foreign currency will be depreciate relative to $. This mean $ will appreciate against Euro.
Ans : Appreciate $ relative to Euro (Option D)
