By this June, 2009, do you think that Bank of Japan will increase the interest rate, because of deflation?
Increase in interest rate from 0.50% to 0.75%.
Because many funds are going to borrow yen. Will yen start to go up this summer, in June, 2009?
The Japanese economy has suffered its worst recession/slump in last quarter, but slight improved sentiments in terms business confidence, gearing up for investments and with rise in equities (global phenomenon). Signs of defaltionary pressure is exerting on the economy. Do you think that BOJ will likely to increase interest rate from low 0.50% to 0.75% by late summer and do you think Yen will further strengthen against US$. Investors are moving away from risk free assets of treasurues to more risker and speculative investments like corporate bonds and equities. With US dismal economic outlook and deficit widening futher, investors will start to borrow yen/ restart yen carry trade this summer. Both inverse correlation to risk aversion and pressure on BOJ to increase interest rate will possibly see a much stronger yen in late summer. Any comments please on this analysis
- Anonymous1 decade agoFavorite Answer
No. BOJ will not able to increase the interest rate due to concern about further recession.
- Robert MLv 71 decade ago
Current dollar/yen trend is down, so yes.