Implications for the credibility of the current lira parity

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Continue with the last question. Imagine that in Italy, the interest rate on five-year government bonds was 11 percent per annum and that in Germany, the rate on five year government bonds was 8 percent per annum.

What would have been the implications for the credibility of the current lira/DM exchange parity?

Reference no: EM131167723

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