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Session 2

Session 2. Summer 2003. Uncovered interest parity. Covered interest parity. Supply of foreign exchange. i. £. . e. e. . e. f. . i. $. Figure 12.8: Shifts in the Demand for Foreign Exchange Change the Exchange Rate. e = $/£. i. £. . e. e. . S £. e. f. . i. $. e.

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Session 2

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  1. Session 2 Summer 2003

  2. Uncovered interest parity

  3. Covered interest parity

  4. Supply of foreign exchange

  5. i £  e e  e f  i $ Figure 12.8: Shifts in the Demand for Foreign Exchange Change the Exchange Rate e = $/£ i £  e e  S£ e f  i $ e 1 e 0 D£ 1 e 2 D£ 0 D£ 2 0 Quantity of £ -Denominated Deposits

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