by cutting interest rate, returns from investments in that currency based on interest rate (e.g. bonds) will be lower, thus lowering the demand. Also is cheaper to borrow so more supply of that currency. so less demand and more supply drops the value of the currency, just like any other goods.
Central bank lowers interest rates, so investors will put their money in countries where the returns are higher because of higher interest rates. If the investors get rid of ur local money, then the supply for that currency goes up. If the demand for the currency goes down, and supply goes up, the real exchange rate will go down, as it serves as a price on currency exchange market
I could be wrong but yes to some extent as general imported goods will be more expensive. I'm not an expert hopefully someone with more knowledge could come in and explain this to both of us.
With mining companies thiugh it makes sense storage is not only expensive but also dangerous. But for cpuntries though just dont dig up when cheap @melbourneplanespotter3631
First good trading video representing Nigerians better.
Thank you for the simple explanation
Great stuff ❤ I also trade FOREX
Could you please elaborate on the relationship between currency and interest rate?
by cutting interest rate, returns from investments in that currency based on interest rate (e.g. bonds) will be lower, thus lowering the demand. Also is cheaper to borrow so more supply of that currency. so less demand and more supply drops the value of the currency, just like any other goods.
Central bank lowers interest rates, so investors will put their money in countries where the returns are higher because of higher interest rates. If the investors get rid of ur local money, then the supply for that currency goes up. If the demand for the currency goes down, and supply goes up, the real exchange rate will go down, as it serves as a price on currency exchange market
Would it only be cheaper in the short term, and inflation will eventually kick in
I could be wrong but yes to some extent as general imported goods will be more expensive. I'm not an expert hopefully someone with more knowledge could come in and explain this to both of us.
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Why would you underprice your natural resources.
I think this was just an example. Pretty much everyone sells natural resources according to their market price in dollars.
With mining companies thiugh it makes sense storage is not only expensive but also dangerous. But for cpuntries though just dont dig up when cheap @melbourneplanespotter3631