International parity conditions approach Do international parity conditions hold in the real world? Empirical tests indicate that the international Fisher effect performs poorly in predicting short-term changes in exchange rates. At longer horizons it appears that currencies with high interest rates tend to depreciate as predicted by the international Fisher effect.International parity conditions approach Do international parity conditions hold in the real world? Empirical tests indicate that the international Fisher effect performs poorly in predicting short-term changes in exchange rates. At longer horizons it appears that currencies with high interest rates tend to depreciate as predicted by the international Fisher effect