Federal Reserve Exchange Rate Deals

Federal Reserve System

The Federal Reserve System (also called the Federal Reserve or just the Fed) is the central banking system of the United States of America. The role of central banks is to preserve the value of money by keeping inflation low and stable. They do this by controlling the interest rate at which banks can borrow.

Interest rates, inflation, and exchange rates are all intrinsically linked. When the Fed manipulates interest rates this impacts both the inflation in the US and also the relative value of the US dollar compared to other currencies.

Read our guide to the Relationship between Interest Rates and Currencies.