Suppose the Mexican peso (MXN) interest rate and the Indian rupee (INR) interest rate are the same,
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Suppose the Mexican peso (MXN) interest rate and the Indian rupee (INR) interest rate are the same, 5 percent per year. What is the relation between the current equilibrium MXN/INR exchange rate and its expected future level? Suppose the expected future MXN/INR exchange rate, 3.40 INR per Mexican peso, remains constant as India’s interest rate rises to 10 percent per year. If the Mexican interest rate also remains constant, what is the new equilibrium MXN/INR exchange rate?
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Related Book For 
International Economics Theory And Policy
ISBN: 9781292409719
12th Edition
Authors: Paul Krugman , Maurice Obstfeld, Marc Melitz
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