How interest rates affect a currency?

Interest rates can have a significant impact on a country’s currency. When a country’s central bank raises interest rates, it can make the currency more attractive to foreign investors looking for higher yields. This increased demand for the currency can cause it to appreciate in value. On the other hand, when interest rates are lowered, the currency may become less attractive, which can cause it to depreciate. Additionally, changes in interest rates can affect international capital flows, which can also impact currency values. Therefore, interest rates can be a crucial factor to consider when analyzing and forecasting currency movements.

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