forex cashback easy

The impact of interest rate changes on the exchange rate


often hear the word forex cashback easy forexcashbackeasy, but really understand it? The official explanation refers to the ratio of the amount of interest to the total amount of borrowed capital in a certain period The controller of interest 100%cashbackforex cashbackforex generally the central bank of a country, that is, the central bank, such as often heard of the ECB, the Bank of England, etc.; the United States is the Federal Reserve, known as the Federal Reserve Board When a countrys economy is overheated, the inflation rate rises, the central bank cashback forex generally raise interest rates, tight credit; once the economy is overheated and inflation is under control, the central bank This is what we often hear about macro-control, then the interest rate is one of the most important basic economic factors, but also one of the important tools of macro-control in all countries At the same time, interest rates also have an important impact on the exchange rate exchange rate generally refers to the relative price between the currencies of two countries, this price and the pricing mechanism of other commodities is the same, are determined by supply and demand The exchange rate is determined by the supply and demand in the foreign exchange market, but foreign exchange as a financial asset, as long as there can bring income investors in the choice is to hold the national cashbackforexpip or choose to hold foreign currency since the investment, the purpose is certainly to obtain benefits, so which currency can make money on the kind of choice then how to measure the yield of different national currencies? Of course the exchange rate Simply put, a currency interest rates rise, then its interest earnings increase, then of course in the eyes of investors is very sought after, investors buy the currency, the currency to get good support, that will appreciate; Conversely, if interest rates fall, then its earnings will be reduced, of course, no attraction So here you just need to remember the following mantra on it:  Interest rates rise, the currency is strong; interest rates fall, the currency is weak There are also many investors on hand not only hold a currency, when there are two currencies, will bring different returns due to different currency interest rates, then the hedge will appear the so-called hedge is to sell the currency with low returns, buy the currency with high returns, of which the interest rate is one of the most important factors to consider todays market economy and open economy is developed, interest rates and exchange rates The linkage between the strong When a countrys interest rates rise or higher than another countrys interest rates, the countrys financial assets yield must rise or higher than another country, then in the short term, will cause foreign capital inflows, when the foreign supply increases, will drive the demand for local currency increases, which will lead to the depreciation of foreign currency, the appreciation of the local currency when a countrys interest rates fall or lower than another countrys interest rates, the country The rate of return on financial assets must fall or lower than another country, then in the short term, will cause foreign capital outflows, when foreign currency demand increases, it will cause the demand for local currency to decrease, which will lead to foreign currency appreciation, local currency depreciation Lets take an example: after August 1987, the dollar interest rate fell, when people went to buy pounds, because the pound is a high-interest currency a large number of purchases make the pound against The dollar exchange rate rose from 1.65 to 1.90 in a short period of time, an appreciation of nearly 20% of this appreciation is too much, in order to limit the appreciation of the pound, May to June 1988, the Bank of England cut interest rates several times in a row, from 10% to 7.5%, after a number of interest rate cuts, the exchange rate of the pound against the dollar also fell, but also caused the British inflationary pressure rose no coincidence, the early 1980s The United States has a large trade deficit and a huge fiscal deficit, but the United States to implement a high interest rate policy, prompting a large amount of capital from Japan and Western European countries into the United States, so that the dollar has been very strong from the beginning to the end of course you must know is that the dollar trend is greatly influenced by interest rates