If a nation's central bank increased domestic interest rates, the nation's exchange rate would change if the country's exchange rate was

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If a nation's central bank increased domestic interest rates, the foreign investors would find it more attractive to invest in that country's currency, resulting in an increase in demand for that currency. This would lead to an appreciation of the currency's value, causing the exchange rate to change. This process only works with a flexible exchange rate, as fixed exchange rates are set and maintained by the government, while crawling peg and nominally fixed exchange rates are arrangements that are less rigid than a fixed exchange rate but are not entirely flexible.

If a Nation's Central Bank Increased Domestic Interest Rates, the Nation's