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Politics : Welcome to Slider's Dugout
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To: SliderOnTheBlack who wrote (8494)3/19/2008 2:25:15 AM
From: croesus1111  Read Replies (3) of 50710
 
Forgive my ignorance, but how can the BOJ kneecap the carry trade now? The threat in the past was that they would raise interest rates, but how can they do that now with their currency so strong and their exporters crying? As you said in a later post, they are jawboning about the yen being too high. Which should be good for the carry trade precisely because they cannot raise interest rates.

Now I agree that they will try to do a prop job on the dollar. But I don't see how that will negatively affect the carry trade. And, as you had astutely predicted, the shock to the carry trade was what hurt the gold market so much in August.

This time, if they do anything to interest rates, it seems like they would have to cut. So what is the scenario by which gold would take a big dive now? Are some concerted G7/IMF gold sales and some strong buying of treasuries and intervention on the currency markets enough now? Maybe if they get the timing right...
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