Interest Rate

Are the major fundamental driving-factor in the exchange rate of currencies. In layman's terms the interest rate is the amount of money a government will give to you just for holding their currency. Governments change interest rates to drive invesmtent in their countries and also to control inflation. Typically currencies with higher interest rates tend to do better against currencies with weaker interest rates. News regarding possible interest rate changes can drastically effect markets in the short- and long-term.

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