Question: There is a specific relationship between the differential in nominal interest rates of two countries at the beginning of a period and the expected exchange

There is a specific relationship between the differential in nominal interest rates of two countries at the beginning of a period and the expected exchange rate movement over that period. How can  you see this relationship? Discuss and explain in your own words

 

Illustrate your understanding of this relationship by providing a specific numerical example of how it works.

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