Importance of Interest Rates in Forex Market – Barry Sendach
Interest rate is one of the most influencing factors in Forex Market according to Forex market expert, Barry Sendach. The Interest rates are been decided and regulated by the Central Bank of particular nation. The countries keep on changing the interest rates in order to encourage people to invest in their currency. In order to adjust the rates in their efforts to encourage the trade, investment and control over the price inflation. The lower interest rates use to encourage the economic expansion, as credit cost becomes cheaper. Higher interest rates delay the economic expansion as the charge on credits is reduced to certain amount.
The frequent changes in the interest rates greatly influence the currency value by attracting the traders and the investors. Lowered interest rates on currency implies that the yields are denominated by the dollar as the dollar denominated assets are less. This clearly gives less incentive or profit to traders on investment. The rate is not the only thing that influences the traders and investor’s involvement. The decisions taken by the FOMC are also important. The interest rate that is been regulated by the FOMC, is been taken as standard and the investors and traders take further decisions on its base.
Explaining the characteristic of Central Banks, Barry Sendach is highlighting the importance of interest rates that are been regulated –
- Setting overnight lending rates in order to change the interest rate paid on currency
- Buy and sell the government securities to increase or decrease the supply of currency between traders and investors.
- Purchase and sale of domestic currencies in open Forex Exchange to affect the exchange rates.
- The central banks regulate certain economic goals before changing the interest rates on currency
- Access the capital reserves to maintain and control interest rates for local currency
All the above-mentioned characteristics of Central Banks of different countries are been analyzed by experts like Barry Sendach to suggest people of right time to invest.