Thursday, December 27, 2007

Don’t worry (ctd)

Pound hits all-time low vs euro

"Sterling, which has the highest interest rates in the Group of Seven industrialised nations, benefits from the carry trade where investors borrow low yielding currencies such as the yen to fund purchases of higher yielding assets in other currencies.However, investors flee from the relatively risky carry trade when jitters set in". (Jitters, what jitters?)

Posted by alan @ 04:27 PM (1941 views)
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One thought on “Don’t worry (ctd)

  • I must add when we started talking about inflation in the begining of the year I did mention.
    the only reason why UK£ was rising against the US$ was because dollar was falling faster than UK£.

    US$ has fallen almost 20% against currencies in the far east and UK£ by 10%. Hence it is stronger than US$.

    But as UK imports most of the stuff from far east, it is now importing inflation. reason being now we have to pay 10% more pounds for the same goods in addition to the internal inflation of far east

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