InvestorQ : Are the INR / USD movement also impacted by the interest rate movements?
Jignesh Gupta made post

Are the INR / USD movement also impacted by the interest rate movements?

Answer
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Maniish Lofar answered.
2 years ago


Why do interest rates have to impact your INR/USD movement? The reason is fairly simple. When interest rates are hiked then there is a greater preference for investing in the bonds of that country as the spread over the US benchmark bond is attractive. Normally, higher interest rates are synonymous with a strong rupee and lower interest rates are synonymous with a weak rupee. In addition, the expectation of GDP growth also triggers strengthening of the INR. We have seen that the Trump trade to pulling up the USD as well as strengthening currencies like INR.