exchange rates and interest rates

as we saw when we DISCUSSED the FUNCTIONS of money , there are other things we can do with it apart from SPENDING it ,for INSTANCE ,we can exchange it for the money of other countries, using aprice called the rate of exchange. this rate of interest is the price or cost of money to the borrower whether he or she is in the UK Or overseas , he or she has another way of acquiring pounds - buying them in exchange for another currency on the foreign exchange market . this possibility of choosing between borrowing pounds on te money markets or buying them means that interest rates and exchange rates are closely linked , as traders switch from currency to currency and market to market to seek the most attractive returns on their funds . usually an increase in interest rates in country leads to arise in the exchange rate of it is currency , as more people buy it , unless the foreign exchange markets lose confidence in that currency .