How does the russian interest rate raise will defends the Ruble from devaluation? This strategy (interest raise to minimize currency devaluation) is being adopted in countries like Brazil and Russia:


Brazil interest rate http://www.tradingeconomics.com/brazil/interest-rate

Russia interest rate http://www.tradingeconomics.com/russia/interest-rate



How does the interest rate rise protect the currency value?

I'm used to see news about governments raising the interest rate with the aim of protect the currency value. But I never saw an explanation about how these two things are related.
An interest rate is the return that a lender earns on money lent to someone else. If the interest rate is higher then it makes lending money more attractive because the return is higher.

In particular, if the interest rate in, say, Russia increases relative to that in the USA then American lenders will switch from lending their money in America to lending their money in Russia where the return is greater. But in order to lend money in Russia, these investors are first going to have to convert their dollars into roubles. This increased demand for roubles causes the price of the rouble (i.e. the exchange rate) to increase.