Which face capital inflows nd which to face capital outflows

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Suppose that the U.S. dollar-pound sterling spot exchange rate equals $1.60/£, while the expected future rate is $1.64/£. The yield on a one-year U.S. Treasury bill is 9% and on a one-year U.K. Treasury bill the yield is 8%. Does the interest parity condition hold? If not, which country would you expect to face capital inflows and which to face capital outflows?

Reference no: EM13232367

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