National interest rates influence currency values in a variety of ways. The most direct way they accomplish this is by influencing the demand for a specific currency. When a country raises interest rates, it signals to investors that the economy is doing well and that they should invest in the currency of that country. Because of the increased demand, the currency's value will rise. Furthermore, by lowering interest rates, a country is essentially telling investors that it does not believe the economy is doing well and that they should invest elsewhere. Because of the decreased demand, the currency's value will fall.

National interest rates significantly impact currency values. When a country raises its interest rates, it often attracts foreign capital as investors seek higher returns, increasing demand for that country's currency and boosting its value. Conversely, lower interest rates can lead to a depreciation of the currency as investors seek better returns elsewhere. This relationship is driven by the interest rate differential between countries, influencing forex markets and capital flows. High-interest rates can curb inflation, stabilizing the currency, while low rates might stimulate economic growth but could weaken the currency. Central banks' policies and market expectations of future interest rate changes also play crucial roles in shaping currency values.