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 raise that the traders are certain the Fed will increase its benchmark to 4.75 percent on March 28, and predict about a 65 percent incur of another increase to 5 percent at the May meeting. However the outlook was not the same say in October 2005 when Fed was expected to go in for graduated dosages of increase in beguile rate in keeping with the tr give the axe began since June 2004. The dollar had then risen 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 longest 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 percentage points in 2005 year and reached as much as 3.27 percentage points on March 28 200 5. As a result of these Japanese investors were buying the dollar to purchase overseas assets, such as Treasuries strengthening interest in dollar.