Foreign exchange rates and U.S. interest rates
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Suppose the Federal Reserve Bank of the US unexpectedly raises interest rates in the US. How do you think this will impact the foreign-exchange market?
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Solution Summary
A discussion on the affects of changes in the interest rates in the U.S. on the foreign exchange markets.
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The foreign exchange markets would have to approach buying the dollar and any currency that rates itself against the dollar with a more cautious eye. The price of the dollar would most likely rise as long as inflation was kept in check, but the ...
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