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Post Why should you as a trader pay attention to interest rates?
Anggota Sejak Jul 09, 2020
20 pos
Jul 28, 2020 at 08:43
Anggota Sejak Jul 09, 2020
20 pos
The general rule is that, as interest rates rise, they tend to increase demand for the currency. Due to higher interest rates, major investors tend to follow fixed-rate currencies.
Yet interest rates don’t just exist. Investors also tend to consider various other aspects such as geopolitical factors, economy overall stability, etc. Interest rates in large developed economies have not increased higher than 3% in recent years.
But if you look at developing economies, you can see higher interest rates. Developing economies typically have interest rates of at least 5%, if not more.
One reason for this is that developing economies tend to attract investors. In exchange for higher interest rates, developing economies can use the money to spend on infrastructure or debt financing.
There’s also a risk with higher rates. Most developing economies have no stable geopolitical scenario compared to developed economies. This in itself creates investor risk.
Returning to developed economies where interest rates aren’t that high, even 2% is sometimes considered a good return.
Investors looking for lower risk, but a slightly higher reward tends to chase higher-rate currencies
Yet interest rates don’t just exist. Investors also tend to consider various other aspects such as geopolitical factors, economy overall stability, etc. Interest rates in large developed economies have not increased higher than 3% in recent years.
But if you look at developing economies, you can see higher interest rates. Developing economies typically have interest rates of at least 5%, if not more.
One reason for this is that developing economies tend to attract investors. In exchange for higher interest rates, developing economies can use the money to spend on infrastructure or debt financing.
There’s also a risk with higher rates. Most developing economies have no stable geopolitical scenario compared to developed economies. This in itself creates investor risk.
Returning to developed economies where interest rates aren’t that high, even 2% is sometimes considered a good return.
Investors looking for lower risk, but a slightly higher reward tends to chase higher-rate currencies
Anggota Sejak Mar 22, 2018
13 pos
Jul 28, 2020 at 11:03
Anggota Sejak Mar 22, 2018
13 pos
With interest rates close to 0% in developed countries (and likely to stay that way for many years). Haven't interest rates lost their importance. It is the CHANGE in interest rates that can drive currency changes and as rates are expect to remain the same in all developing countries this is likely to have no impact on fx prices
Anggota Sejak Jul 09, 2020
20 pos
Anggota Sejak May 14, 2019
30 pos
Anggota Sejak Jul 20, 2020
341 pos
Dec 11, 2020 at 10:55
Anggota Sejak Apr 15, 2020
219 pos
When there is a rate hike, the currency will appreciate, which means that traders will buy. And when there is a cut, traders will sell and buy currencies with higher interest rates. Once a trader has determined the market movement, it is crucial to place the trade carefully
The more your practice, the more you learn.
Anggota Sejak Aug 17, 2020
123 pos
Dec 14, 2020 at 05:34
Anggota Sejak Aug 17, 2020
123 pos
The modification of interest rates also have an impact on the economy. Lower interest rates can stimulate the economy as it is cheaper to borrow money. Higher interest rates do the opposite and this way they play a role in controlling inflation.
Anggota Sejak Mar 17, 2021
536 pos
Anggota Sejak Jul 23, 2020
759 pos
Anggota Sejak Jul 23, 2020
869 pos
Nov 30, 2021 at 07:31
Anggota Sejak Dec 28, 2019
18 pos
The changes of interest rates are directly affect the price of particular assets. Mainly, it concerns all the assets, but cryptocurrency isn't so affected by the changes of interest rates. When you have a growing market, the upgrade of interest rate can easily turn bullish trend into bearish one just for couple of hours. A lots of traders would lose their money and their accumulations. In my opinion, interest rate is the key indicator on the market and thus, the US government understands it. They didn't change interest rate couple of weeks ago and it's good.
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