siavosh

the sentence answers itself really - but in essence and as simply as possible- interest, while representing the "cost" of funds - also represents the expected return on a domestic investment.

so when domestic interest rates are lowered - capital flows out of that country in an effort to seek higher returns elsewhere - as a result of this capital flow there is sellside pressure on the domestic currency ( in favor of a higher yielding currency ) as investors exit their positions.

hope it helps