If interest rates is higher in Tanzania than in the kenya ,then the ksh is expected to depreciate with respect to the tsh.
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.
When interest rates in one country, in this case Tanzania, are higher than in another country, Kenya, it is generally expected that the currency of the country with lower interest rates, in this case the Kenyan Shilling (KSH), will depreciate in value relative to the currency of the country with higher interest rates, the Tanzanian Shilling (TSH).
Higher interest rates in a country usually attract more foreign investors seeking higher returns on their investments. As a result, there will be an increased demand for the currency of the country with higher interest rates, leading to an appreciation in its value. On the other hand, the country with lower interest rates may experience a decrease in foreign investment, leading to a decrease in demand for its currency and a depreciation in its value.
Therefore, if interest rates are higher in Tanzania compared to Kenya, it is likely that the Kenyan Shilling (KSH) would be expected to depreciate with respect to the Tanzanian Shilling (TSH).