Yields, exchange rates and interest rates

Question

Nov 12, 2006, 03:58 AM

dschurder

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Join Date: Nov 2006

Posts: 4

Yields, exchange rates and interest rates

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?

Answers

Nov 12, 2006, 02:20 PM	#2

CaptainForest Finance & Accounting Expert Join Date: Nov 2005 Location: Canada Posts: 3,658	Who knows? Depends on which one is more prevalent.

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