Why should we care about foreign interest rates?

Why should we care about foreign interest rates?

Expert Solution

We should be caring about foreign Interest rates because-

A. Foreign interest rate will be having an implication of the overall exchange rate of the foreign currency in respect of the domestic currency.

B. If the countries ate having a Export Import relationship with another country, it will be impacted in the overall balance of payment as well as current account and other capital accounts as well.

C. It would also mean that there would be a flow of investment into another country if there is very lucrative interest rates so it would be accounted by foreign company

D. it could be taken for an indication of deciding upon monetary policy also by looking at interest rates of another country

E. foreign interest rates can also signal any impending recession because there will be globalisation in nature and there would be complete chain of interrelated effect.

F.it will be having the effect on the value of the investment in the other country and exposure in the sovereign bonds in the other country.

jeff jeffy answered 2 years ago

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