interest rates attracting foreign investors

CFA Level I Economics
#1

I read that when a central bank raises the policy rate, it reduces investment and consumer spending. That makes perfect sense.

But then why does it also say that high rates make domestic investment ATTRACTIVE TO FOREIGNERS?

#2

I believe that that refers to investment in domestic securities; investment in government bonds that will deliver a higher yield.

#3

So I guess the assumption is that if the government is lending at higher rates, it is also offering a higher rate on their bonds?

Good enough for me, thanks man

#4

My pleasure.

#5

You can see this happening in Turkey at the moment.