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    Thread: Interest rate?

    1. #21
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      Quote Originally Posted by qlink View Post
      I've read that if the interest rate is increased
      the currency will also increase
      I am always find different views
      but I think you mistake because when country rise the interest rate there is dept and government rise the interest rate on Individual and corporate loans


    2. #22
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      Quote Originally Posted by lovemoon2011 View Post
      hello every one
      I want ask about Interest rate
      when Interest rate go up is this good for currency I heard information but I am not sure from that when Interest rate go up that is mean There is a rise in the rate of inflation so the currency go down facing other currencies
      i think it is not right to use the news is very deficult whay sometimes the news tell you that the pair will be down but it will be not do
      i have try to trade whith news so i loss money don''t use it if you are not exper


    3. #23
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      Quote Originally Posted by mohalia View Post
      i think it is not right to use the news is very deficult whay sometimes the news tell you that the pair will be down but it will be not do
      i have try to trade whith news so i loss money don''t use it if you are not exper
      I see you are right but it Does not prevent we know Technical fundamental
      but what bout your opinion in Interest rate do you think if Interest rate go to up the currency will go down or the opposite is right


    4. #24
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      Inflation is a large pointer to a declining ecönomy, the increase in interest rate could lead to a decrease in value.


    5. #25
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      Quote Originally Posted by lovemoon2011 View Post
      I see you are right but it Does not prevent we know Technical fundamental
      but what bout your opinion in Interest rate do you think if Interest rate go to up the currency will go down or the opposite is right
      I think the interest rate can not change the currency position...the currency goes up
      or down for other cause ......but the interest rate change by the government of that country
      for any rules or any situation.....
      currency and the interest rate do not move together.....


    6. #26
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      Quote Originally Posted by Zibran View Post
      I think the interest rate can not change the currency position...the currency goes up
      or down for other cause ......but the interest rate change by the government of that country
      for any rules or any situation.....
      currency and the interest rate do not move together.....
      can you explain more please and give live example ?


    7. #27
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      It totally depend on the country whose interest has gone up or down...

      for example if the interest rate in USA goes up then people will deposit more USD in the banks rather then spending them...

      this will increase the demand of USD in the market hence rising its value...

      regards


    8. #28
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      Quote Originally Posted by saqlain View Post
      It totally depend on the country whose interest has gone up or down...

      for example if the interest rate in USA goes up then people will deposit more USD in the banks rather then spending them...

      this will increase the demand of USD in the market hence rising its value...

      regards
      yes you are right so when interest rate go to up currency go to down and opposite is right


    9. #29
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      The above statement is correct.It is based on Interest rate parity theory. The equation will explain it.

      F0 = S0 x 1+ic/1+ib where F0 is future ex rate and S0 is spot rate ic is counter currency interest rate and ib is base currency rate.

      Suppose interest rate in us is 2 , Euro zone is 1 and spot of Eur/Usd is 1.2 then future rate would be 1.2 x1+.01/1+.02 =1.1882 that means Euro has depleted in value.

      This happens because people with euro accounts will transfer all the money will transfer their euros to usd just to earn the better interest rate thus increasing the demand for the USD.




      But sometimes it doesn't happen. I think it's because of inflation. If the interest rate hike was to counter inflation their may not be a profit in transferring. I can get another formula but I guess it will be confusing.


    10. #30
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      Quote Originally Posted by binjam View Post
      The above statement is correct.It is based on Interest rate parity theory. The equation will explain it.

      F0 = S0 x 1+ic/1+ib where F0 is future ex rate and S0 is spot rate ic is counter currency interest rate and ib is base currency rate.

      Suppose interest rate in us is 2 , Euro zone is 1 and spot of Eur/Usd is 1.2 then future rate would be 1.2 x1+.01/1+.02 =1.1882 that means Euro has depleted in value.

      This happens because people with euro accounts will transfer all the money will transfer their euros to usd just to earn the better interest rate thus increasing the demand for the USD.




      But sometimes it doesn't happen. I think it's because of inflation. If the interest rate hike was to counter inflation their may not be a profit in transferring. I can get another formula but I guess it will be confusing.
      thanks binjam your image is very Expressive


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