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 analytical thinking of the Current website During the initiatory 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 eyeshade dearth (USD800), the USD is heading towards a 140 JPY/USD level. There atomic number 18 2 main reasons to explain the USD level in 2005. The first wizard is that thanks to a rising pastime gauge insurance policy led by the FED (4.75%), the USD rose. so high pastime raises attracted Foreign Direct Investments (FDI), for example when the oil determine increase a lot of oil exporting 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) time, the bank of Japan (BoJ) kept its bear on rate funny to zero. But expectations are not very confident for the USD. In fact, high interest rate leads to an increase in the metal money which attracts FDI but it hurts exports. In 2005, the US current account shortfall 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 encounter 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. Scen ario 1: BoJ interest rate grows up to 4.25% ! In this 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 predicate 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, sight it on our website: OrderEssay.net

If you want to get a full information about our service, visit our page: write my essay