An asset manager has conducted an extensive econometric study and proposes a forecasting model. He has found that a currency with a high interest rate tends to appreciate relative to a currency with a low interest rate. The simple forecasting model for the one-year exchange rate is that a currency should appreciate over the year by the amount of the interest rate differential quoted today. For example, if the Australian dollar exchange rate is AUD/$ = 2 and the one-year interest rates in AUD and $ are 4% and 7%, respectively, the U.S dollar should move up by 3% relative to the Australian dollar, and your forecast for the exchange rate at the end of the year is AUD/$ = 2.06. If everyone were using your model and following your strategy, what would happen to the exchange and interest rates? ( )