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| Discuss Euro and Yen{play the market} at the Forex within the Traderji.com - Discussion forum for Stocks Commodities & Forex; Euro is finding itself loosing against the Dollar , and it may further more deteriorate ... |
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#1
4th October 2006, 03:31 PM
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Euro and Yen{play the market}
Euro is finding itself loosing against the Dollar , and it may further more deteriorate with reports of slowing growth dampening inflation hence reducing the chances of the European Central Bank from raising interest rates into 2007.
Whereas , on the other hand , Euro is in a much better position when compared to the Yen . This year the Euro has risenmore than 7 percent against the Yen , the driving force being the varied interest rates between the two currencies. If, the Euro is weak against the Dollar, The yen seems to be ever weaker than the Euro , I feel that the Yen and Euro will decline as both these currencies are being sold heavily in the market . play the market... 
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#2
5th October 2006, 12:56 PM
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Re: Euro and Yen{play the market}
It’s the time to revise the Interest rates in Europe by the European central bank. Euro and Yen currency selling’s will increase if it continue for a longtime and Currency Arbitragers will get the benefit from the weakened currencies.
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#3
6th October 2006, 11:19 AM
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Re: Euro and Yen{play the market}
What is the forward currency exchange rates on Euro and Yen? IS there an arbitrage opportunity?
The following formula gives the arbitrage = arbitrage (pure riskless profit) = Forward rate - {Spot currency rate * [(1+domestic interest rate)/(1+foregin interest rate)]} The spot currency rate is in the form of domestic/foregn...e.g. for a person residing in Europe, the domestic currency is Euro and the spot rate will be in the form of Euro/Dollar. The domestic interest rate with the rate of interest in his country. You need 4 things to calculate this - a. The Spot or current currency coversion rate in Euro/Dollar or Euro/Yen b. The 1 year forward currency contract rate. This is a 1 yr forward contract rate in the form of Euro/Dollar c. The interest rate in Europe d. The interest rate in USA Thanks, Mohan
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