A fall in a country's interest rate will generally cause the currency to _____, and a rise in interest rates will cause the currency to:

Question

Quizplus · Accepted Answer

A fall in a country's interest rate generally leads to a depreciation of its currency because lower interest rates make investments in that country less attractive, reducing demand for the currency. Conversely, a rise in interest rates tends to appreciate the currency as higher returns attract more foreign capital, increasing demand for the currency.

A Fall in a Country's Interest Rate Will Generally Cause