When Central banks increase interest rates...

What causes the currency to rise exactly?

 

The interest paid out in lending money in that currency's instruments is taken up, therefore it is in higher demand.

 

The easy way to remember this is that capital always chase higher interest rates. So if the interest rate goes up then there are capital inflows and hence the currency rises.

 

So how can I, in a foreign country, take advantage of this? What are the different ways of investing ?

 

Forex.