Definitions

Exchange rates/Trade Flow

• The value of a currency relative to other countries.
• If the currency is cheap, then its country's export would be cheap.
• If it's expensive, then the demand of the country's exports would be low.

Interest Rates

• Investors want to be in markets that are most attractive to them.
• Countries with high interest rates are the most appealing.
• Therefore, the demand for the country's currency is very high.

Graphs

Examples:

United States dollar in exchange for the chinese Yuan