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📉 REAL INTEREST RATES — THE TRUE DRIVER OF CURRENCY VALUE
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💡 THE CORE IDEA
Nominal charges lie.
Actual rates of interest inform the reality.
Currencies don’t observe headline charges — they observe returns after inflation.
Whoever gives the very best actual yield attracts capital.
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📊 WHAT ARE REAL INTEREST RATES?
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Actual Curiosity Fee = Nominal Curiosity Fee − Inflation
Examples:
Optimistic actual charges help a foreign money.
Unfavourable actual charges destroy buying energy.
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⚠️ WHY REAL RATES MOVE FX MORE THAN HEADLINES
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1️⃣ Capital Allocation
Traders chase actual returns, not faux yield.
Larger actual charges → capital inflows → stronger foreign money.
2️⃣ Inflation Confidence
Optimistic actual charges sign inflation management.
Unfavourable actual charges sign coverage failure.
3️⃣ Lengthy-Time period Foreign money Worth
Sustained unfavourable actual charges assure foreign money debasement over time.
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📉 REAL-WORLD EXAMPLES
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🇺🇸 USD (2022–2023)
🇯🇵 JPY
🇨🇭 CHF
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📈 WHY FX TRENDS PERSIST WITH REAL RATE GAPS
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When one nation has optimistic actual charges
and one other has unfavourable actual charges,
capital flows don’t reverse shortly.
This creates:
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⚙️ PRO TIP — TRACK REAL YIELD DIFFERENTIALS
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Watch:
The foreign money with rising actual yields virtually at all times wins.
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🚀 TAKEAWAY
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Actual rates of interest are the last choose of foreign money worth.
Excessive nominal charges with excessive inflation imply nothing.
Currencies strengthen once they defend buying energy.
They weaken once they silently tax it away.
In foreign exchange, inflation-adjusted reality at all times beats headline noise.
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📢 JOIN MY MQL5 CHANNEL FOR MORE FOREX FUNDAMENTALS AND REAL-WORLD TRADING INSIGHTS:
👉 https://www.mql5.com/en/channels/issam_kassas
