Anonymous
Anonymous asked in Social ScienceEconomics · 1 month ago

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

5 Answers

Relevance
  • kswck2
    Lv 7
    1 month ago

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

    • Commenter avatarLog in to reply to the answers
  • Oiy
    Lv 6
    1 month 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.

    • Commenter avatarLog in to reply to the answers
  • Anonymous
    1 month ago

    Typically, its currency compared to other nations would rise.

    • Commenter avatarLog in to reply to the answers
  • Anonymous
    1 month 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. 

    • Commenter avatarLog in to reply to the answers
  • What do you think of the answers? You can sign in to give your opinion on the answer.
  • 1 month ago

    Speaks volumes in slick shoes

    • Commenter avatarLog in to reply to the answers
Still have questions? Get answers by asking now.