I have read on the Curiculum (page 75 volume 3) that if one country’s exchange rate is severely undervalued and is expected to rise substantially agains another country’s, then the bond yields in the first country will be lower than they would otherwise be in relation to the other country.
I dont undertand why will be lower in the country with an undervalued currency. I think they will have to be higher in order to attract money and become less undervalued.
Can someone help me?
Thanks.
I dont undertand why will be lower in the country with an undervalued currency. I think they will have to be higher in order to attract money and become less undervalued.
Can someone help me?
Thanks.