February 17, 2009
Currencies bottom out
Story link: Currencies bottom out
Currencies will continue to be devalued if their rate of interest in the said country is below the rate of inflation, and rightly so.
So that includes the Sterling, where inflation stands at around 3% while the interest rates set by the Bank of England are just 1.5%.
Of six central banks voting on interest rates last week, only the European Central Bank in Frankfurt failed to reduce its cost of money to either record or multi-year lows, holding rates steady at 2.0%.
The market’s reaction? Forex traders trashed the euro vs. those currencies now paying way less than inflation.