International Fisher Effect


IFE. Theory that the currency of a nation with a comparatively higher interest rate will depreciate in value in comparison to the currency of a nation with a comparatively lower interest rate. It further implies that the extent of depreciation will be equal to the difference in interest rates in those two nations. It is based on the observation that the level of real interest rate in an economy is closely linked to the level of local inflation rate and is independent of a government's monetary policies. Thus, in general, the higher the inflation rate, the lower the value of currency.
Named after its proposer, the U.S. economist Irving Fisher (1867-1947).

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You should try and follow the international fisher effect and see if you can use it in your companies favor.

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Due to the international fisher effect, they believed that the value of the country would depreciate more because of their higher interest rates.

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My boss believes in keeping interest rates in the United States low because he believes it was cause the dollar to appreciate against other currencies through the International Fisher Effect.

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International Financial Reporting Standards (IFRS) International Fisher Effect (IFE)