Interest rates in Brazil are rising relative to those in the United States. Which of the following correctly describes the change in values of the Brazilian real (Brazil's currency) and the U.S. dollar with respect to one another?(1 point)

Question

Responses

The U.S. dollar is appreciating while the Brazilian real is appreciating.
The U.S. dollar is appreciating while the Brazilian real is appreciating.

The U.S. dollar is depreciating while the Brazilian real is appreciating.
The U.S. dollar is depreciating while the Brazilian real is appreciating.

The U.S. dollar is appreciating while the Brazilian real is depreciating.
The U.S. dollar is appreciating while the Brazilian real is depreciating.

The U.S. dollar is depreciating while the Brazilian real is depreciating.

Answer 1

When interest rates in Brazil rise relative to those in the United States, it typically attracts foreign investment, as investors seek higher returns. This demand for Brazilian assets can lead to an appreciation of the Brazilian real.

On the other hand, if the U.S. dollar is less attractive due to lower interest rates, it may depreciate relative to other currencies.

Therefore, the correct response is:

The U.S. dollar is depreciating while the Brazilian real is appreciating.