Abstract
The study sought to analyze the movements between foreign exchange rates and bank interest rates in Kenya. Secondary data was utilized in the study. The data on foreign exchange rates and interest rates for the period covering January 2006 and December 2010 were obtained mainly through document reviews. The data was analysis using multivariate regression. It was established that foreign exchange rates had a significant relationship with bank interest rates. The study further concluded that the movement between the Euro and Bank Deposit Rate was positive and significant. The movement between the US Dollar and Bank Deposit Rate was positive but not significant while the movement between the pound and Bank Deposit Rate was inverse and significant.
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