Fx Strategies In 2006: U.S. Dollar Vs. Yen

1. Assume it is April 1st 2006. Based on the case, build a compelling case for buying or selling JPYUSD uninflected thinking of the Current website During the number one half of the decade of the 2000s, the USD had appreciated. In 2005, the USD went against each predictions of the prognosticators and rose. Despite a terrible current billhook dearth (USD800), the USD is heading towards a 140 JPY/USD level. There argon 2 main reasons to explain the USD level in 2005. The first wizard is that thanks to a rising pastime justice insurance policy led by the FED (4.75%), the USD rose. indeed high pastime raises attracted Foreign Direct Investments (FDI), for example when the cover determine increase a lot of oil merchandise countries legitimate a surplus in dollars and invested this surplus in US treasury bonds, and it helped to keep a strong USD. In the same(p) t ime, the bank of Japan (BoJ) kept its take rate awry(p) to zero. But expectations ar not very confident for the USD. In fact, high interest rate leads to an increase in the bullion which attracts FDI but it hurts exports. In 2005, the US current account shortage was heading towards USD 800 billion. With such a deficit, the US wont be able to sustain a strong USD.

We are going to develop 2 scenarios. The first one hug drug on describe a situation where the USD depreciates against the JPY, after the BoJ change magnitude its interest rates. The second one will describe a situation where the USD will appreciate against the JPY thanks to low interest rates in Japan. Scenario 1: BoJ interest rate grows up to 4.25% In thi! s scenario, we assume the dollar is going to depreciate against the yen. Therefore, we are considering a situation with high interest rates colonised by the Bank Of Japan (BOE). Our assumption would be a rate set at 4.25%. This situation will mention divers(a) consequences for the different indicators and actors of the financial economic scene. First of all, this will be a bad...If you want to get a full essay, cabaret it on our website: OrderEssay.net

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