They can attract more overseas investment, which means more money coming into a country and higher demand for the currency. Higher interest rates can increase a currency's value.

Higher rates can make it more expensive to borrow, and more rewarding to save, reducing demand and slowing inflation. There isn’t much wrong with being a Dollar bear.

That increase in demand can push inflation higher.īut if inflation is rising too fast, a central bank may increase interest rates, aiming for the opposite effect. Kit Juckes, Chief Global FX Strategist at Société Générale, analyzes CFTC data, highlighting the Canadian Dollar as an attractive currency. Lower interest rates make it cheaper to borrow, and less rewarding to save, which encourages people to spend.

If inflation is below its target level, a central bank may look to cut interest rates. For example, the Bank of England has an inflation target of 2%, as of. But too much inflation can be a problem, as goods and services become less affordable.Ĭentral banks consider this balance when setting interest rates. Some inflation - rising prices of goods and services - is healthy for an economy, as it shows increasing demand versus supply. Inflation and interest rates are closely related, and both affect exchange rates. Exchange rates table for US Dollar - All currencies The table below shows the exchange rates for US Dollar in All currencies.

Dollar to all currency