Question

Use The Wall Street Journal or another data source to record the interest rate differential between...

Use The Wall Street Journal or another data source to record the interest rate differential between the interest rate of the Phillipines and the U.S. rate over the last five or so quarters. Then, review the exchange rate percentage change in the foreign currency of concern PHP over each of those corresponding quarters to determine whether the international Fisher effect (IFE) appears to hold over those quarters for that currency. Please show all work.

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Answer #1

While the IFE predicts a depreciation for PHP against USD, the same is exhibited in actual also. However the absolute values are different as shown in above table.

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