Yields, exchange rates and interest rates

dschurder · #1 Nov 12, 2006, 04:58 AM

When interest rates falls, then bond prices rise and yields fall.
However, when the exchange rate falls, investors demand less bonds, price of bond falls and yields rise. So what happens in an environment of falling interest rates and depreciating exchange rate- the 2 are opposing consequences- which one wins?

CaptainForest · Nov 12, 2006, 03:20 PM

Who knows?

Depends on which one is more prevalent.



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