FLUCTUATION OF RATES

One of the first causes of fluctuations is the interest rate offered in a country.

To understand the link between the interest rate and the value of the currency of the same country, it is necessary to put yourself in the shoes of an investor who seeks the best possible return.

Assume a country A that offers a 5% return on its bonds, while the investor lives in a country B that offers only 4%.

He will probably prefer to obtain the higher return of country A, as long as the risk is similar at the level of the two countries.

To make this investment and get the higher yield, the investor will have to do two things:

1 - Sell the currency of country B

2 - Buy the currency of country A

The purchase of the currency of Country A is necessary because to be able to invest in a bond of country A which offers a yield of 5%, it is necessary to buy this financial product with the currency of the country in question to settle the purchase transaction.

This currency conversion will make appreciate the currency of the Country A (increase of its demand) and will depreciate the currency of the country B (fall of the demand).

Since WAT $ is not convertible into any other currency and indexed to an immutable standard, its exchange rate remains unchanged. As for its borrowing rate, it is frozen at 1%.

1 WAT $ = 1 Hour of work of a person without qualification.

Credits are granted at a fixed rate of 1% to avoid speculation.