Anonymous
Anonymous asked in Social ScienceEconomics · 2 months ago

if a country raises its interest rate, what happens to its exchange rate?

5 Answers

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  • kswck2
    Lv 7
    2 months ago

    It depends on how many other market pressures there are a the time.

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  • Oiy
    Lv 6
    2 months ago

    The hard currency will flow in to gain from higher rate without doing any investment. The capital account will grow up with foreign reserves, and the exchange rate will be appreciated.

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  • Anonymous
    2 months ago

    Typically, its currency compared to other nations would rise.

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  • Anonymous
    2 months ago

    It varies. If a country with a weak economy and runaway inflation (over 50%) were to raise the central banks interest rate it may have little to no effect as the underlying economy is so poor.  But if a strong economy with a market set exchange rate (so not China) were to raise interest rates the market will typically see exchange rates increase as international money flows into the country (to be deposited in banks to earn higher interest rates). But…there’s many variables. 

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  • 2 months ago

    Speaks volumes in slick shoes

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