How to change security if inflation in the us were higher

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Reference no: EM13242080

Holding all else equal, what should happen to the exchange rate if the interest rate on U.S. securities rises more rapidly than the interest rate on Mexican securities (In other words, should the dollar get stronger, weaker, or remain unchanged)? Explain. How would your answer change if inflation in the U.S. were higher than inflation in Mexico?

Reference no: EM13242080

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