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Random article: Interrelation between benchmark interest rate and currency rate
Central Bank applied base rate to impact on the economy. In what way? If interest rates grow, the economic activity becomes slow and inflation gets down . If interest rates is declined, then economic activity is fostered due to less cost of credit.
That is to say, if other things being equal Australian benchmark rate is higher than Canadian (both currencies are considered to be recourse-based and if the price of raw material is stable, both economies have more or less equal conditions), then in this currency pair Australian dollar will rise in price whereas Canadian will get cheaper. AUD deposit will provide more profit in percentage than CAD does and that will boost demand for the currency with a higher percentage on deposit.
