Higher interest rates tend to attract foreign investment, increasing the demand for and value of the home country's currency. Conversely, lower interest rates tend to be unattractive for foreign investment and decrease the currency's relative value.
Considering this, what affect currency?
A country's terms of trade improves if its exports prices rise at a greater rate than its imports prices. This results in higher revenue, which causes a higher demand for the country's currency and an increase in its currency's value. This results in an appreciation of exchange rate.
How does currency appreciation affect imports and exports?
A strong dollar or increase in the exchange rate (appreciation) is often better for individuals because it makes imports cheaper and lowers inflation. A weak currency or lower exchange rate (depreciation) can be better for an economy and for firms that export goods to other countries.
How can a country increase the value of its currency?
If the price of a country's exports rises by a greater rate than that of its imports, its terms of trade have favorably improved. This, in turn, results in rising revenues from exports, which provides increased demand for the country's currency (and an increase in the currency's value).