Short-term, the currency ratio varies directly with the interest rate and the stability of the banking system.

Question

Quizplus · Accepted Answer

Short-term currency value is influenced by interest rates and the stability of the banking system, as higher interest rates can attract foreign investors looking for higher returns, and a stable banking system suggests a lower risk of financial instability, both of which can increase demand for a currency, thereby increasing its value.

Short-Term, the Currency Ratio Varies Directly with the Interest Rate