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Politics : Dutch Central Bank Sale Announcement Imminent?
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To: sea_urchin who wrote (18139)4/30/2003 2:51:40 PM
From: yard_man  Read Replies (1) of 81019
 
>>The point I am trying to make is that the raising of interest rates may diminish inflation in a closed economy but not in an open one where foreigners can take advantage of the raised rates by bringing in unlimited amounts of cash. This, in fact, has the opposite effect on inflation than the one intended.<<

this is what I don't understand. The cash comes in -- but not for the purpose of purchasing goods -- it comes in seeking the yield --

as you said -- the strong rand hurts exports -- foreigners get less for their dollars if they purchase things in SA. I don't understand how a strong rand increases inflation ... please explain. Is a ton of new debt being issued and that flowing locally into purchasing power??
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