dynamics of a currency


Q

quebecstat

The following is taken from a mainstream book on financial
derivatives.

"The price of currency A expressed in terms of the price of currency B
follows the process

dS=(rB-rA)S*dt+sigma*S*dt

where rA is the risk free interest rate in currency A, and rB is the
risk free interest rate in currency B"

I am a little bit confused here. When rB > rA, the price of currency A
goes up? I thought that when the difference in interest rate is
positive, the currency where the interest rate is high goes up.

I greatly appreciate your help.
 
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