Answer:
The International Fisher Effect (IFE) is an economic theory stating that the expected disparity between the exchange rate of two currencies is approximately equal to the difference between their countries' nominal interest rates.
Step-by-step explanation:
The international Fisher effect is a hypothesis in international finance that suggests differences in nominal interest rates reflect expected changes in the spot exchange rate between countries. The expected future spot rate is calculated by multiplying the spot rate by a ratio of the foreign interest rate to the domestic interest rate: 1.5339 x (1.05/1.07) = 1.5052.