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Forex Trading is all about currency. So means different currencies pay different interest rates. This is one of the main driving forces behind the trends of changes. It is likely to be attractive, a buyer for a single currency, pay high interest rates during the short period of time, low interest rates.
Although these interest rates, perhaps not very large, they are of great importance in a highly leveraged position. For example, the interest rate between the dollar and the Japanese yen, was about 5% for several years. In the situation that are supported by a margin of 5% to file these results in a gain of 100% on capital invested per year for purchases of USD. Of course, an even more important factor is a general rule, the relative value of currencies, the change of 15% to a low level during the year 2005 without taking into account the rate differential interest. In a simple vision interest rate differential, you have an advantage of 100% per annum in your favour, in times of dollars and the first part of the same size in a short time.
Such a situation clearly the advantages of high interest rate currency and, hence, the dollar has been a sharp rise in all by 2005. But he was not sure that the currency with higher interest rate is stronger. If the reason for the high rate of inflation is galloping, it can be confidence in the currency over the perceived benefits of high interest rates.
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