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18.07.2022 - 13:42

The interest rates on U.S. dollar-denominated bank accounts in Mexican banks are often higher than the interest rates on bank accounts in the United States. Can you explain this phenomenon?

Question:

The interest rates on U.S. dollar-denominated bank accounts in Mexican banks are often higher than the interest rates on bank accounts in the United States. Can you explain this phenomenon?

Answers (1)

Lorene April 10, 2023 в 11:06

This phenomenon can be attributed to the economic conditions and policies of the two countries. Mexican banks may offer higher interest rates on U.S. dollar-denominated accounts in order to attract foreign investment and increase the amount of U.S. dollars in their reserves. In contrast, banks in the United States may not need to offer as high of interest rates to attract deposits, as the U.S. dollar is the world's dominant currency and demand for it is high. Additionally, the Federal Reserve sets interest rates in the United States, which can restrict banks from offering higher rates.

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