I understand when interest rate goes us market goes down and vice versa. But why? Any logical explanation?
View on r/NepalStock by [deleted]
high interest rates means bank ma paisa rakhera byaj khane rather than invest in stock markets…also taking loans from banks to invest in the market is not profitable when the interest rate is high
They are inversely related
If interest rate increases cost of borrowing increases and since business use debt to fuel their growth they aren’t able to do so in an economy with high interest rate! Plus, when interest rate goes up, depositing the money in a bank becomes more attractive than investing in stock market(risky) so money flows from capital market to banks!
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