Flow-er
Active member
In this thread we will talk about, how interest rate affect the value of a currency . So many people do not understand the logic behind the interest rate. The interest rate is an instrument that is used by the government to make the currency much more stronger or weaker as the case may be. When you have high interest rate, there is every possibility that the currency will be stronger because it will be limited in supply and as such the demand will increase making the currency to be very strong.
At high interest rate, loans will not be disposed because people will not be willing to take loans with high interest. Mortgages will not function properly because people will not be willing to pay high interest on mortgages etc. When you have a high interest rate, it will create a limited supply of the currency into the system and this will cause a high demand, the aftermath will be an increase in the market value of the currency.
The interest rate is a government policy that is disbursed by the Central Bank of the country and it will have effect on all financial institutions, if a policy is made. This is basically how the interest rate functions and the impact it has on the currency of a particular country.
At high interest rate, loans will not be disposed because people will not be willing to take loans with high interest. Mortgages will not function properly because people will not be willing to pay high interest on mortgages etc. When you have a high interest rate, it will create a limited supply of the currency into the system and this will cause a high demand, the aftermath will be an increase in the market value of the currency.
The interest rate is a government policy that is disbursed by the Central Bank of the country and it will have effect on all financial institutions, if a policy is made. This is basically how the interest rate functions and the impact it has on the currency of a particular country.