Question: Is there a relationship between a country's interest rate and the currency exchange rate in the foreign exchange market? What does it matter?

Interest rate directly reflects the economic policy of a country's central bank, so it has a great influence on the foreign exchange market.

The higher a country's interest rate, the higher its relative monetary value.

The relationship between them is as follows:

High interest->; High monetary return;

Low interest->; Low monetary return;

If the central bank raises interest rates, its currency price will rise;

When the central bank cuts interest rates, its currency price will fall.