Searching for Yield: Investors Pile into the Dollar for Higher Yielding Investments

History will probably show that central banks’ monetary policies were akin to bloodletting– long discredited as an effective form of medical treatment for the sick and dying.  As easy cheap money floods a particular banking system, the currency becomes less desirable on a relative basis; investors convert into other currencies with higher yielding investment returns (even if negative).

As the Fed has held the line against moving to a negative interest rate policy,  the Trump rally has locked in the expectation of higher growth and higher yields for U.S. investment. Investors rush in to buy the higher yield dollar causing significant appreciation relative to other currencies. Dislocations will occur and some people will make a lot of money and others will be on the other side of the trade.

How Does Negative Interest Rate Affect Currency Prices

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