Title: FIN 565 Course Marvelous Learning/ snaptutorial.com - PowerPoint PPT Presentation

Description: For more classes visit www.snaptutorial.com Factors Affecting Exchange Rates a.Identify the most obvious economic reason for the persistent depreciation of the peso. b.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? – PowerPoint PPT presentation