Many experts believe that the major determinant of exchange rates in the short run is relative

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Many experts believe that the major determinant of exchange rates in the short run is relative interest rates. This is because interest rates affect the demand for a country's currency. When a country's interest rates rise relative to other countries, investors are more likely to invest in that country, creating a demand for the country's currency and increasing its exchange rate. Conversely, when interest rates fall, investors are less likely to invest in that country, decreasing the demand for its currency and lowering its exchange rate.

Many Experts Believe That the Major Determinant of Exchange Rates