Before fully discussing the economic literature on the relationship between interest rates and exchange rates, it will be useful to briefly discuss some of the important theories of exchange rate determination. There are many theories such as Purchasing Power Contract Theory (PPP), Flexible Price Monetary Model (FPM), Sticky Price Monetary Model (SPM), Real Interest Rate Differential Model (RIRD) and portfolio balance theory (PBT). of the determination of the exchange rate. The PPP to maintain equality between domestic and foreign prices relies on the national currency through commodity arbitrage. If the equilibrium is violated, the same commodity after the exchange rate adjustment will be sold at different prices in different countries. As a result, commodity arbitrage or buying a commodity at the same time at the lowest price and selling it at higher prices will bring the equilibrium exchange rate back. FPM, SPM and RIRD known as Model Monetarists Exchange Rate Determination. The demand and supply of money are a determining factor of the exchange rate. They also assume that domestic and foreign bonds are equally risky as their expected returns will be equalized and covered interest parity will prevail. Assuming that wages in the labor market and commodity prices in the goods market are perfectly flexible, the PPP theory continues to hold, and that the expected return between domestic and foreign bonds of the same risk and maturity, FPM argues that relative money supply, inflation expectations, and economic growth as the primary determinant of the exchange rate in the economy. The SPM, first developed by Dornbusch (1976), argues that short-term prices and wages tend to be rigid, investors wish to equalize forecasts... middle of the paper... monetary policy rather than measures default risk alternatives. Furthermore, according to Shalishali (2012), applying the International Fisher Effect (IFE) theory in his research, he stated that IFE is an important concept in the fields of economics and finance that connects interest rates, the inflation and exchange rates. Bjornland (2008) found that the monetary policy shock now implies a strong and immediate appreciation of the exchange rate. Furthermore, he also said that monetary policy shock temporarily reduces output while increasing unemployment and has a negative effect on consumer price inflation. In addition to this, Kearns and Manners (2006) find that monetary policy shock will increase the interest rate and have a significant appreciation effect on the exchange rate. Therefore, an interest rate increase may have prevented the exchange rate from falling further.