If a nation 39 s interest rates are relatively low compared to those of other countries then the exc...........

Indian Economy External Sector

If a nation's interest rates are relatively low compared to those of other countries, then the exchange value of its currency will tend to:

appreciate under a system of fixed exchange rates.

depreciate under a system of fixed exchange rates.

depreciate under a system of floating exchange rates.

appreciate under a system of floating exchange rates.

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Explanation:

Changes in interest rates affect a country's currency. Higher interest rates lead to an increase in the demand for a country's financial assets, and an increase in the demand for a currency. So, currency will appreciate. Lower interest rates reduce speculative demand for assets and reduce demand for a currency; thereby, causing depreciaton in currency.