Understanding “interest cover ratio” in Forex Trading

Estimated read time 4 min read

The Interest Cover Ratio is a measure of a company’s ability to cover its interest expenses with its operating profits. It is calculated by dividing the company’s operating income by their interest expense. This ratio is especially important for companies that make use of debt to finance their operations because higher ratios indicate that the company may have less of a risk of defaulting on its debt obligations. In the Forex market, the Interest Cover Ratio is used as an indicator of a country’s currency strength as the ratio can affect the ability of a country to meet its debt obligations and pay sufficient interest to bondholders.