202191 Resource 119235 120646 120646 1208953768391 1208953768391 Controlled Currency Trading: Interest Rate Differential

Interest rates and forex trading

<font size="2"><span style="font-family: verdana,arial,helvetica,sans-serif;">In currency trading, you might hear the term &quot;interest rate differential.&quot; This is a forex trading term that refers to the differences between interest rates set by central banks that are in charge of setting policy for monetary systems.</span><br style="font-family: verdana,arial,helvetica,sans-serif;" /><br style="font-family: verdana,arial,helvetica,sans-serif;" /><span style="font-family: verdana,arial,helvetica,sans-serif;">In the United States, the Federal Reserve does this. The interest rate that influences the euro is set by the European Central Bank. The Bank of England, Bank of Japan and the Reserve Bank of Australia all perform this function as well.</span><br style="font-family: verdana,arial,helvetica,sans-serif;" /><br style="font-family: verdana,arial,helvetica,sans-serif;" /><span style="font-family: verdana,arial,helvetica,sans-serif;">The interest rate differential is the difference in interest rates. For example, with a US rate of 2.5% and a European rate of 4.0%, the differential is 1.5. The wider the differential, the more one currency is expeccted to gain above the other.</span></font><br /> 9 application/xml false Bank of England currency trading euro forex trading Federal Reserve forex trading forex trading term interest rate differential interest rates monetary systems Learn forex trading http://www.gftforex.com/land/index.asp?aid=446 Mozilla/5.0 (Macintosh; U; PPC Mac OS X Mach-O; en-US; rv:1.8.1.14) Gecko/20080404 Firefox/2.0.0.14 127.0.0.1 127.0.0.1 mmarquit 66.182.71.18 false true false false true 119235 blog blogsite/GFTForex/web