Module 5: Fundamental Analysis

Interest Rates

5 min read

Interest-rate differences between countries are one of the strongest long-term currency drivers.

Rates and capital flows

Higher interest rates can attract investment into a currency. Markets price in expected future rates, so a currency may move well before a decision and react to guidance more than the decision itself.

Key takeaways

Rate differentials drive currency flows.
Expectations matter more than the decision.
Rates also influence swap costs.

Educational content only, not financial advice. Trading forex and CFDs involves significant risk of loss.