A rise in domestic interest rates relative to interest rates in other countries may lead to an exchange rate:

Question

Quizplus · Accepted Answer

A rise in domestic interest rates relative to interest rates in other countries will make the domestic currency more attractive to foreign investors, leading to an increased demand for the currency and an appreciation of its value. This will make exports more expensive and imports cheaper, leading to a decrease in net exports.

A Rise in Domestic Interest Rates Relative to Interest Rates