Interest rate - forex broker rebate program

(1) The meaning of forex broker rebate program autorebateforex Interest rate, in its manifestation, forexrebatebest the ratio of the amount of interest to the total amount of borrowed capital over a certain period of time For many years, economists have been working to find a theory that can fully explain the structure forexbrokerrebateprogram changes in interest cashback forex, the classical school believes that the interest rate is the price of capital, while the supply and demand for capital determine the changes in the interest rate; Keynes, on the other hand, saw the interest rate as the price of using money Marx believed that the interest rate is part of surplus value and is an expression of the participation of borrowing capitalists in the distribution of surplus value Interest rates are usually controlled by the central bank of the country and in the United States are managed by the Federal Reserve Board Nowadays, all countries use interest rates as one of the important tools of macroeconomic regulation When the economy is overheated and inflation rises, they raise interest rates and tighten credit; when the overheated economy and inflation When the overheated economy and inflation is under control, the interest rate will be adjusted down appropriately Therefore, the interest rate is one of the important basic economic factors (2) the interpretation of interest rates interest rate level against the foreign exchange rate has a very important impact, interest rates are the most important factors affecting the exchange rate We know that the exchange rate is the relative price between the currencies of two countries and the pricing mechanism of other commodities, it is determined by the supply and demand in the foreign exchange market Foreign exchange is a financial asset, people hold it because it can bring capital theft people choose whether to hold the national currency or a foreign currency, the first thing to consider is which currency can bring him a greater return. The rate of return of each countrys currency is measured by the interest rate of its financial market. If the interest rate of a currency rises, the interest income of holding that currency increases, attracting investors to buy that currency, therefore, the currency is favorable (bullish) support; if the interest rate falls, the return of holding that currency will be reduced, the attractiveness of that currency will be weakened. Interest rates fall, the currency is weak from the economic sense, in the foreign exchange market equilibrium, holding any two currencies should bring equal returns, which is: Ri = Rj (interest rate parity conditions) Here, R represents the rate of return, i and j on behalf of different countries currencies If holding two currencies brings unequal returns, it will produce arbitrage: buy A foreign exchange, and sell B foreign exchange this arbitrage, there is no Any risk thus once the yields of the two currencies are not equal, the hedging mechanism will prompt the yields of the two currencies to be equal, that is, the interest rates of different national currencies inherently have a tendency and tendency to equalize, which is a key aspect of the impact of interest rate indicators on the direction of foreign exchange rates, and is also the key to our interpretation and grasp of interest rate indicators For example, after August 1987, as the dollar fell, people scrambled to Buy the pound, a high-interest currency, resulting in a very short period of time the pound exchange rate rose from $1.65 to $1.90, an increase of nearly 20% in order to limit the rise of the pound, in May-June 1988, the United Kingdom reduced interest rates several times in a row, from 10% to 7.5% annual interest, along with each interest rate cut, the pound will fall but because of the rapid depreciation of the pound, inflationary pressure, followed by the Bank of England However, due to the rapid depreciation of the pound, inflationary pressures increased, and then the Bank of England was forced to raise interest rates several times, the pound exchange rate began to gradually recover in the open economy, the international capital flows on a huge scale, greatly exceeding the amount of international trade, indicating the great development of financial globalization interest rate differences on exchange rate movements than in the past is more important when a country tightens credit, interest rates will rise, the formation of interest rate differences in the international market, will cause short-term capital to move between international, capital Generally always flows from countries with low interest rates to countries with high interest rates so that if the level of interest rates in one country is higher than other countries, it will attract a large amount of capital flows, and the outflow of funds from the country will be reduced, leading to a rush to buy this currency on the international market; at the same time, the capital account balance is improved and the exchange rate of the national currency is raised. Conversely, if the interest rates fall when a country loosens credit, and if the level of interest rates is lower than other countries, it will cause a large outflow of capital, foreign capital flows decrease, the capital account balance deteriorates, while the foreign exchange market will sell this currency, causing the exchange rate to fall in general, the U.S. interest rates fall, the dollars trend is weak; U.S. interest rates rise, the dollar trend preference from the U.S. Treasury bill (especially long-term Treasury bills) price changes in the movement of U.S. interest rates can be explored, and thus can be useful for If investors believe that U.S. inflation is under control, then the interest yield on existing Treasury bills, especially short-term Treasury bills, will be favored by investors, and bond prices will rise. In the first half of the 1980s, the U.S. dollar remained strong despite a large trade deficit and a huge fiscal deficit, which was the result of the high interest rate policy of the U.S., which prompted a large amount of capital to flow to the U.S. from Japan and Western Europe.