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Originally Posted by lycan  Not sure what your point is. In what sense is this relevant? |
Well, you're talking about buying high rates and selling low rates. The reason a carry trade like that would work is that investors would want to buy bonds in the high-yield country to increase their returns. In order to do that, they would need to buy that country's currency, and thus the price of the currency you're long in would go up.
If this were true, the Euro and Korean Won should be kicking ass over the last decade, and the Dollar and Yen should be losing. My point is simply it doesn't work that way - 3/4s of those predicted events didn't happen.