Understanding World Interest Rates

April 26, 2010 - PRLog -- Understanding the effect of Globalization on the world’s interest rates is a complexity that has vastly changed the way the world’s strongest economies work and has made every nation essentially dependent on the financial success of other nations.  Factors such as inflation, political climate, and monetary and fiscal policy within one of the larger economies of the world can have a major effect on the other economies tied to it though globalization.
A classic example of how a county’s economy can be affected by circumstances in other counties on need look no further than OPEC.  The Organization of Petroleum Exporting Countries provides oil to major economies around the globe.  In the early 1980’s when the savings rate declined so drastically throughout the region, non-OPEC nations experienced sharp declines as well.  Many economies rely on other economies for economic development so when one country experiences a financial crisis, it has a cascading effect on the other economic powers tied to it.
The Organization for Economic Cooperation and Development (OECD) makes up nearly three quarters of the worlds investment.  Therefore, economic prosperity and soundness within these nations have an impact on the interest rates and trends felt throughout the world.  The organization is comprised of 30 countries and most are high income economies and regarded as developed countries.
Interest rates can affect the value of a nation’s national currency as well.  For example when one  nation’s interest rates are higher than other competing counties, investors from foreign counties want to invest their funds in investments that provide a higher return, based on the interest rate so they are more likely to invest in the county providing the higher interest rate.  The increased demand and investment pushes up the value of the currency.  The opposite can happen when interest rates are low.
Interest rates provide a looking glass into the condition of a nation’s economy and can be used to encourage domestic investment, trade, and productive output.  Interest rates around the world have effects that impact everyone as we are all consumers and trade with nations around the globe provides many of the products we buy everyday.Find out more about world interest rates by visiting the website http://www.economywatch.com/interest-rates/world-interest...

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