Interest rate is the connection instrument between FX rates and money market.
The interest rate of a particular currency is essentially the price of money in that currency. Precisely, the interest rate is the cost of borrowing that particular currency
The following are the main factors affecting interest rates
（1）Supply and demand for money
The interest rate is determined by the money market by simple supply and demand. The more people who want to borrow money, the higher the interest rate, the more people who want to lend money, the lower the interest rate. The greater demand for money, the higher the interest rate .Higher interest rates put off borrowers, and hence slow down economic activity. Lower interest rates encourage borrowers and hence stimulate economic activity.
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