Respuesta :
The U.S. interest rate will be higher than the Japanese interest rate, and interest rate parity will hold because funds move to find the highest available return.
More about interest rate parity :
According to the interest rate parity (IRP) theory, the difference in interest rates between two nations is equal to the difference between the forward and spot exchange rates.
Interest rate parity is the key formula that controls how interest rates and currency exchange rates interact. IRP's fundamental tenet is that hedged returns from investments in various currencies should be the same regardless of the interest rates associated with those currencies.
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