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How Do Interest Rates Affect Currencies?

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Noviarini

How Do Interest Rates Affect Currencies? in Forex Education_xx
The easy answer is that it makes global investors pour their money into countries so they can get a piece of the return. As interest rates go up, interest in that country's currency goes up. If a country raises interest rates over an extended period of time, this can cause a broad trend against other currencies. Money just continues to pile into these currencies until there is any indication that the party might end soon.

The downside of this approach to trading is that it's very risk sensitive. Anything that could affect economies globally can shake an interest rate trade to the core. This type of shakeup doesn't come often, but when it does, it leaves disaster in its wake for anyone that isn't prepared.



There are always multiple factors that move a currency, but interest is one of the number one factors, only followed by risk.




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#1 - February 05, 2019, 03:55:52 AM
« Last Edit: February 05, 2019, 03:57:04 AM by Admin »

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How Do Interest Rates Affect Currencies? in Forex Education_xx
Interest rates greatly affect currencies because this is the main thing in currency movements, the interest rate of a country becomes a measure of a country's progress or development and of course it greatly affects the currency
#2 - February 05, 2019, 11:55:36 AM

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Absolutely, interest rates are indeed an important indicator for a country towards the country's economic condition. If the interest rate is good, there will be many investors who are interested so that the country's economy is also good and the currency will strengthen, but controlling interest rates for a country is important so that it is not too low or too high.
#3 - February 07, 2019, 10:52:51 AM
« Last Edit: February 07, 2019, 10:59:27 AM by ariezz »

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but remember friends aren't just interest rates that can affect the market,
  however, many aspects cover the global economy

what I'm worried about is market sentiment, whether negative or positive..
#4 - February 08, 2019, 02:09:06 PM

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The interest rate has a high important role for the trader, if bank central increasing interest rate, usually will influenced on their currency become a strength, but conversely if bank central decreasing value interest rate, it could make their currency being weak, but sometime any country they make devaluation currency for certain goal for economic growth
#5 - February 09, 2019, 07:14:02 AM

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How Do Interest Rates Affect Currencies? in Forex Education_xx
The easy answer is that it makes global investors pour their money into countries so they can get a piece of the return. As interest rates go up, interest in that country's currency goes up. If a country raises interest rates over an extended period of time, this can cause a broad trend against other currencies. Money just continues to pile into these currencies until there is any indication that the party might end soon.

The downside of this approach to trading is that it's very risk sensitive. Anything that could affect economies globally can shake an interest rate trade to the core. This type of shakeup doesn't come often, but when it does, it leaves disaster in its wake for anyone that isn't prepared.



There are always multiple factors that move a currency, but interest is one of the number one factors, only followed by risk.
my knowledge about this is , if rates hike , that currency will get strengthen . if rates reduce , the currency will weaken.
#6 - February 09, 2019, 12:06:18 PM

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