Predicting currency movement

Is the foreign currency with the higher RFR expected to depreciate going forward relative to the domestic currency?

Yes. As per Interest Rate Parity, foreign currency with higher risk free (interest) rate is expected to depreciate.


Bear in mind, however, that interest rate parity doesn’t attempt to predict exchange rate movements; that’s not its job.

Its job is to calculate the forward exchange rate that prevents arbitrage. That’s a whole 'nother beast entirely.