One question. All the countries that try to defend their currency on a crisis, rises the nominal interest rate, so the currency is more attractive for investors. Why they do that? Is like just the opposite to this fórmula?
Are arbitrage and market forces such that this covered interest parity rule is considered an "iron law" for countries with stable economies and governments ? (those economic and government descriptions would be hard to peg/quantify, I'm sure) Or is it more of a dependable theory that hasn't been disproven?
Dear Friends, I have a question: in IRP (Interest Rate Parity), the base rate of the two currencies is the nominal interest rate or the real interest rate announced by the central banks of the two countries?.
excellent explanation, i hope my lecturer sees this and realise how bad his slides are..
i too did. See the name
One question. All the countries that try to defend their currency on a crisis, rises the nominal interest rate, so the currency is more attractive for investors. Why they do that? Is like just the opposite to this fórmula?
Clear and simple. Excellent explanation.
Nicely explained.
Are arbitrage and market forces such that this covered interest parity rule is considered an "iron law" for countries with stable economies and governments ? (those economic and government descriptions would be hard to peg/quantify, I'm sure)
Or is it more of a dependable theory that hasn't been disproven?
Thank you
Dear Friends, I have a question: in IRP (Interest Rate Parity), the base rate of the two currencies is the nominal interest rate or the real interest rate announced by the central banks of the two countries?.