if interest rates on the euro are consistently above u.s. interest rates, then for the international fisher effect (ife) to hold: group of answer choices the value of the euro would often appreciate against the dollar the value of the euro would appreciate in some periods and depreciate in other periods, but on average have a zero rate of appreciation the value of the euro would often depreciate against the dollar the value of the euro would remain constant most of the time the value of the euro would change proportionally to the change in interest rates

Respuesta :

A) If the international fisher effect (IFE) holds and euro interest rates are persistently higher than u.s. interest rates, the value of the euro will frequently rise versus the dollar.

What is the international fisher effect (IFE)?

According to the International Fisher Effect (IFE), the variation in nominal interest rates between any two nations is directly correlated with changes in the exchange rates between those nations' currencies at any given moment. The concept was created by American economist Irving Fisher.

The International Fisher Effect, which is based on present and expected nominal interest rates, is employed to forecast the present and upcoming changes in currency rates. The IFE differs from other techniques that use pure inflation to attempt to forecast and comprehend changes in the exchange rate.

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