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What happens to he usd-euro exchange rate

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Reference no: EM133215268

Consider an investor seeking to invest in France. Using the uncovered interest parity (UIP) condition, explain how each of the following would affect the value of the euro and U.S. dollar.  Write out the steps leading to the final outcome, and what the effect is on the value of dollar, the value of the euro, and the current exchange rate, E$/€.

a) c(E$/€) if there is a decrease in U.S. interest rates?

b) What happens to the USD/euro exchange rate (E$/€) if there is a decrease in the expected future exchange rate, Ee$/€ ?

Reference no: EM133215268

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