1. Congratulations! You have just started your first day as an intern at the International Monetary Fund. The research...
1. Congratulations! You have just started your first day as an intern at the International Monetary Fund. The research department has just provided you with the following information about the US dollar/Turkish lira (₺) exchange rate:
Today’s dollar/Turkish lira spot exchange rate = 0.15
Today’s interest rate on US dollar deposits is = 2%.
Today’s interest rate on Turkish lira deposits is = 22%.
The IMF estimate of the expected dollar/Turkish lira exchange rate in one year is = 0.12
Does uncovered interest parity hold in this case?
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