Difference Between Interest rate and Exchange rate
Interest rates and Exchange rates
The question of interest rate arises when currencies are borrowed or lent; whereas exchange rates are involved when different currencies are being bought or sold.
Exchange rates are subject to more frequent fluctuations than interest rates. Interest rate is a factor that affects exchange rates. High interest rates cause speculative capital to move between countries and thus affect exchange rates.
Interest rate differentials between two countries is a major factor in determining the forward exchange rates of the two currencies the currency of the higher interest rate country would be at a discount in terms of the lower interest rate country. Similarly, the currency of the lower interest rate country would be at a premium in terms of the higher interest rate country.
https://www.capitalbudgetingtechniques.com/difference-between-interest-rate-and-exchange-rate-2/Difference Between Interest rate and Exchange rateInternational TradeInterest rates and Exchange rates The question of interest rate arises when currencies are borrowed or lent; whereas exchange rates are involved when different currencies are being bought or sold. Exchange rates are subject to more frequent fluctuations than interest rates. Interest rate is a factor that affects exchange rates. High... 07castel@gmail.comAdministratorCapital Budgeting Techniques
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