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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Tony van Werkhooven who wrote (430)	1/4/1998 12:32:00 PM
From: tekgk	Read Replies (3) \| Respond to of 9980

>> the central bank is still committed to lower rates in order to encourage economic growth This still sounds like it will result in a devaluation at least unofficially. Even though the currency does not trade freely I am sure that an underground market must exist where it does trade freely. Huge drops in interest rates like the one China started on seems highly inflationary and likely to undermine the value of the currency. Where will the liquidity come from to support borrowers at the lower interest rate? Doesn't the central bank have to inject liquidity into the system? No sane depositor will put their money on deposit at a bank at the new proposed rates.