Discussion question, and a 2 page report answering 2 questions As always, original and well-answered questions

DISCUSSION, DUE WEDNESDAY:

Question (300 WORDS MINIMUM, use powerpoint and lecture to help answer the questions in addition to your own research)

Q1. High interest rates are commonly expected to strengthen a country’s currency because they can encourage foreign investment in securities in that country, which results in the exchange of other currencies for that currency. Yet, the peso’s value has declined against the dollar over most years even though Mexican interest rates are typically much higher than U.S. interest rates. Thus, it appears that the high Mexican interest rates do not attract substantial U.S. investment in Mexico’s securities. Why do you think U.S. investors do not try to capitalize on the high interest rates in Mexico?

ANSWER THE FOLLOWING 2 QUESTIONS, DUE SATURDAY:

• Cite all your sources per APA (both in the body and at the end of the report)
• Professional papers are written in passive voice or as a third person. Omit “I”, “we”.
• Quality is more important than quantity. Approximate length of this report should be 2 pages, answering the following 2 questions.

1. How would a weakening home currency affect the home country’s current account, other things being equal?
2. How can government restrictions affect international payments among countries?