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Q. Discuss studies based on the interest parity conditions.
Answer: Generally the formula doesn't hold and isn't a good predictor of future devaluations. Even poorer it failed to predict accurately even the direction in which the spot exchange rate would change.
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Is a depreciation of the dollar/euro exchange rate correlated with a decrease in the dollar return on U.S. deposits? Answer: No, suppose that the Interest Parity is maintained
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