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• Real interest rates will be reduced.
• In the real interest rates are falling, domestic financial and capital assets become less attractive as a result of lower real rates back. Foreigners will reduce their positions in domestic bonds, real estate, securities and other assets. Financial account (or the balance on capital account) will deteriorate as a result of foreigners holding domestic assets less. Domestic investors will be more likely to invest abroad in the pursuit of high return rate.
• reduction in the investment code in the country by foreigners and citizens of the country will reducing demand for the currency of the country and increasing the demand of foreign currency. Exchange rate of the national currency will tend to decline.
• With no government intervention, financial accounts and current accounts must sum to 0. When the financial account refused , the current account is expected to improve by an equal amount. In other words, the trade balance will improve. Exports of the country would have become relatively cheaper and imports more expensive relative to.
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