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WHY IS IT IMPORTANT?
Watching which economies are offering higher interest rates can help you project where global investors are going to be moving their money and which currencies will be increasing in value.
Global investors are always looking for the best return on their money. If an investor can earn 5 percent holding his money in Economy A, and he can earn 2 percent holding his money in Economy B, he is naturally going to choose Economy A.
As investors begin moving their money into Economy A to take advantage of the higher interest rate, demand for the currency of Economy A goes up. As demand goes up, the value of the currency also goes up. If you can identify which currencies will be increasing in value, you can buy those currencies and increase your profits.
