Post Why should you as a trader pay attention to interest rates?


8 0
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.


Junior member
21 2
This is a fundamental indicator that has a significant impact on all further developments in an asset. Plus, it is a really important economic indicator that needs to be analyzed in order to make a more specific plan of action in the market. In general, when you start trading, you immediately realize that any event, any facts - it can be exactly the component that will allow you to understand what is happening in the market as a whole and decide what you will do next and what specific actions can be useful for you at the moment. And yes, I believe that news is important even for technical analysis enthusiasts.
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