Dollar versus Yen -The Road Ahead Essay Example | Topics and Well Written Essays - 500 words

Dollar versus Yen -The Road Ahead - Essay ExampleInterest-rate futures demonstrate that the traders are real the Fed will increase its benchmark to 4.75 percent on March 28, and predict about a 65 percent chance of another increase to 5 percent at the May meeting. provided the outlook was not the same say in October 2005 when Fed was expect to go in for receive dosages of increase in interest rate in keeping with the trend began since June 2004. The dollar had then go 2.3 percent against the yen since the end of June 2005. The dollar ran its third straight quarterly gain, reported in October 2005, against the yen, the bimestrial winning streak since 2001, as the Federal Reserve stuck to its policy of measured increases in interest rates. The markets had then expected the dollar to rally to about 115 yens. The yield advantage of 10-year US Treasury notes with Japan had averaged 2.87 share points in 2005 year and reached as much as 3.27 percentage points on March 28 2005. As a re sult of these Japanese investors were buying the dollar to purchase overseas assets, such as Treasuries fortify interest in dollar.