Big interest rates in mexico

Assignment Help Macroeconomics

Reference no: EM1373505

Big interest rates are commonly expected to strengthen a nation's currency because they can encourage foreign investment in securities in that nation, which results in exchange of other currencies for that currency. Yet, the peso's value has declined against the dollar over most years even though Mexican interest rates are typically much higher than United State interest rates.
Thus, it appears that the high Mexican interest rates do not attract substantial United State investment in Mexico's securities. Why do you think United State investors do not try to capitalize on the high interest rates in Mexico?

Reference no: EM1373505

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