Economies and Currencies

Global investors have a choice of where to invest their money and so aim to invest it in countries that offer them the best chance to make money. Typically, it’s easier to make money in an economy that’s growing: companies are probably going to sell more goods and services and their profits are more likely to increase. And so investors move investments into countries that are likely to do well (and less in those likely to do worse). In order to invest in a country, they must buy that country’s currency, which increases its value. Economies that are doing well are likely to see their interest rates go up – meaning that money in that country’s likely to earn a greater return by way of interest – and that, too, increases the value of the currency.