An international investor observes that South Africa has consistently offered much higher interest rates on its government bonds than the United States for the past two decades. Based on the long-term relationship typically observed between interest rate differences and currency values, which of the following statements provides the most accurate assessment of the investment's outcome for a U.S.-based investor?
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Over the past 30 years, the average annual interest rate on government bonds in Country A has been 7%, while in the United States it has been 2%. Assuming that, over long periods, the actual change in a currency's value tends to equal the interest rate difference between the two countries, what would be the most likely long-term outcome for Country A's currency relative to the US dollar?
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