'India's central bank sharply raised interest rates. The value of the Indian currency will also increase.
Generally speaking, a country's currency will appreciate at higher interest rates. Higher interest rates frequently draw foreign investment, which raises both demand for and the value of the currency of the host nation. Conversely, lower interest rates typically make a currency less valuable relative to other currencies and make overseas investment less appealing.
Changes in monetary policy that affect national interest rates consequently alter the value of that nation's currency. Raising or lowering interest rates has a lasting effect on the value of a nation's currency, which has subsequent effects on exchange rates around the world.
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