All Eyes on the Yen
David Pilling, Financial Times | October 30, 2008
Japan's central bank has reacted to last weeks rise of the yen as well as to the falling stock market by cutting interest rates. ++ If Japan decides to move towards “zero interest” it would become the “source of almost free money for anyone with an appetite to invest.” ++ The US is faced with a smiliar situtation as the Federal Reserve has also been cutting rates, giving incentives to move the dollar abroad. ++ The underlying problem that needs to be solved is the “arbitrage between countries where money is cheap to those where it is expensive.”
