what happen when interest rate rise of a currency

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waqasabdur
574
waqasabdur  
  • 64% (14)
  • 36% (8)
Total voters: 22
Dua Yong Rew
5437
Dua Yong Rew  

it will strengthen as carry trader will move in to buy more

Yohana Parmi
4993
Yohana Parmi  
waqasabdur:
  • currency will strenghten
  • currency will weaken

Since the choice is only 2, I find it difficult to answer.

Because it depends on the situation of market sentiment at the time.

Maybe you need to add 1 more option, "Uncertain" 

Victor Ziborov
2807
Victor Ziborov  

A low interest rate leads to the strengthening of the currency. For example, the interest rate is USD = 1.25%, and the minimum interest rate is EUR = 0%. That is, take a loan more profitable in EUR. Therefore, speculators buy US shares just for EUR. And that's why EURUSD has been going up for 8 months already.

Victor Ziborov
2807
Victor Ziborov  
Victor Ziborov:

A low interest rate leads to the strengthening of the currency. For example, the interest rate is USD = 1.25%, and the minimum interest rate is EUR = 0%. That is, take a loan more profitable in EUR. Therefore, speculators buy US shares just for EUR. And that's why EURUSD has been going up for 8 months already.

If the leadership of any country wants to increase exports, then the country's money should be cheap. In this case, the production of goods will be cheap, as they will buy cheap raw materials and pay off with working cheap money. Now you can sell this product abroad at world prices. To do this, the country's leadership increases the interest rate, and from this money becomes cheaper.


Angelito Cartagena
395
Angelito Cartagena  

Most likely currency will rise because there will be more people investing in that particular country, it is just basic that when investors sees an opportunity to make better profits they will  pour in some investment to it, although it may not be the case most of the time.

Waseem Raza
9998
Waseem Raza  
waqasabdur:
  • 64% currency will strenghten
    (14)
  • 36% currency will weaken
    (8)

This result showing how many peoples understand Forex 

Rising Interest rates can give strength to currency but it creates problems in exports so when they need to boost export they reduce interest rates ...  

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