If interest rates is higher in Tanzania than in the kenya ,then the ksh is expected to depreciate with respect to the tsh.
1 answer
Yes, that is correct. If interest rates are higher in Tanzania compared to Kenya, it indicates that investors can earn higher returns on their investments in Tanzania. This will attract more investors to Tanzania, leading to an increase in demand for Tanzanian currency (Tanzanian Shilling - TSH). On the other hand, the demand for Kenyan currency (Kenyan Shilling - KSH) will decrease due to lower interest rates in Kenya. As a result, the KSH is expected to depreciate against the TSH.