diff --git a/CHANGELOG.md b/CHANGELOG.md
index c99e577..458fb21 100644
--- a/CHANGELOG.md
+++ b/CHANGELOG.md
@@ -7,6 +7,7 @@
 - Updated vendored rescript-vscode server to `1.1.2` (see changes [here](https://github.com/rescript-lang/rescript-vscode/blob/master/CHANGELOG.md#112))
   - Rename support for let-binding, types, record labels, module names etc
   - **Important:** If you are using coc.nvim, make sure to upgrade to the latest `release` version first, otherwise renaming will not work across files!
+- Improved syntax highlighting for string interpolation ([#44](https://github.com/rescript-lang/vim-rescript/pull/44))
 
 ## 2.0.1
 
diff --git a/examples/rescript-project/src/interpolationSyntax.res b/examples/rescript-project/src/interpolationSyntax.res
new file mode 100644
index 0000000..4691fe4
--- /dev/null
+++ b/examples/rescript-project/src/interpolationSyntax.res
@@ -0,0 +1,11 @@
+let name = "Amirali"
+
+let var = `hello ${name} how you doin?`
+
+let var2 = j`hello ${name} how you doin?`
+
+let var3 = j`hello $name how you doin?`
+
+let varInvalid = `hello $name how you doin?`
+
+let expr = `2 + 2 is ${Int.toString(2 + 2)}`
diff --git a/syntax/rescript.vim b/syntax/rescript.vim
index bf11b29..ca2ac6c 100644
--- a/syntax/rescript.vim
+++ b/syntax/rescript.vim
@@ -82,9 +82,11 @@ syntax match resUnicodeChar "\v\\u[A-Fa-f0-9]\{4}" contained
 syntax match resEscapedChar "\v\\[\\"'ntbrf]" contained
 syntax region resString start="\v\"" end="\v\"" contains=resEscapedQuote,resEscapedChar,resUnicodeChar
 
+" Interpolation
 syntax match resInterpolationVariable "\v\$[a-z_][A-Za-z0-0_'$]*" contained
-syntax region resString start="\v`" end="\v`" contains=resInterpolationVariable
-syntax region resString start="\v[a-z]`" end="\v`" contains=resInterpolationVariable
+syntax region resInterpolationBlock matchgroup=resInterpolationDelimiters start="\v\$\{" end="\v\}" contained contains=TOP
+syntax region resString start="\v`" end="\v`" contains=resInterpolationBlock
+syntax region resString start="\v[a-z]`" end="\v`" contains=resInterpolationBlock,resInterpolationVariable
 
 " Polymorphic variants
 syntax match resPolyVariant "\v#[A-za-z][A-Za-z0-9_'$]*"
@@ -109,6 +111,7 @@ highlight default link resModuleChain Macro
 highlight default link resUnicodeChar Character
 highlight default link resEscapedChar Character
 highlight default link resString String
+highlight default link resInterpolationDelimiters Macro
 highlight default link resInterpolationVariable Macro
 highlight default link resAttribute PreProc