Can some please clarify something for me. In the currency risk management section, CFAI states that a currency with a higher interest rate sees its currency appreciate. However, I thought I remember seeing somewhere in the curriculum that countries with higher interest rates see their currencies depreciate (I thought it was based on forward premium/discount)??? Can someone clarify this/help me think about it correctly?
It’s real interest rate (increases currency) vs nominal interest rate (decreases currrency)thingie…
real and nominal. Higher Nominal country sees its currency dep