High interest rates are commonly expected to strengthen a country's currency because they can encourage foreign investment in securities in that country, which results in the 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 U.S. interest rates.
Thus, it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexico's securities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico?
High interest rates are commonly expected to strengthen a country's currency because they can encourage foreign investment in securities in that country, which results in the 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 U.S. interest rates. Thus, it appears that the high Mexican ...
Solution Summary
Discusses why U.S. investors do not try to capitalize on the high interest rates in Mexico.
... of a country that has a higher interest rate will depreciate ... US interest rate)/ (1+ Australian interest rate) or Forward ... Th rate over this year is expected to ...
... reduce American tourism in Mexico. d. The United States' economy moves into a severe recession. e. The US engages in a high interest rate monetary policy. ...
... reduce American tourism in Mexico. d. The United States' economy moves into a severe recession. e. The US engages in a high interest rate monetary policy. ...
... Assume that the inflation rate becomes much higher in the ... in the US The change in interest rates will place ... increase in the income level in Mexico along with ...
... The decision of the firm to pursue business in Mexico is greatly affected ... the capital required would be available for the business at a higher interest rate. ...
... 43 44 d. A US company purchases from suppliers in Japan, Mexico, and the ... b. If the contract settles at 105-8, are current market interest rates higher or lower ...
... How do changes in interest rates, inflation, productivity ... against speculative attacks during high-turmoil periods ... after their own interests, notwithstanding the ...
... No more national currency crises, which have riled Argentina, Mexico, Thailand and ... money into a country seeking to take advantage of the high interest rates. ...
... to obtain remaining funds for the new Mexico plant. ... would be a. Bond rating - A higher rated bond would ... the bonds may be called if interest rates decline and ...
