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demand for a currency and the interest rate

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Suppose that the following two events take place in the market for Kuwait's currency, the dinar; The U.S. demand for oil, Kuwait's main export good, declines, and market interest rates on financial assets denominated in dinar decrease relative to U.S. interest rates. What happens to the dollar price of the dinar? Does the dinar appreciate or depreciate relative to the dollar?

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The solution determines the demand for a currency and the interest rate.

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There is a direct relationship between the demand for a currency and the interest rate in that country. We can therefore expect that when the interest rates of dinar-based investments decline, the demand for the dinar will as ...

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