How Does Interest Rate Affect Foreign Exchange?
I am learning about foreign exchange,Iwould like to know how interest rates affect forex
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Interest rate has a very strong impact on a country's currency exchange. Till 1990 it was thought that the interest rate parity theory was valid as far as currency's foriegn exchange rate was concenrned, but now the phenomenon does not hold true for most of the currencies. Now if the interest rate of a country rises, the demand of that country's currency goes up and its value gets appreciated and vice versa
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