From October 2000 through March 2001, Polish bonds roared higher, benefiting from cuts in official policy interest rates in response to clear signs of slowing economic activity within the Polish economy. The dollar–Polish zloty exchange rate, which at one time had been as high as 4.75 extended its downward trend, at one point breaking through [...]
Speculators Join the Crowd — The Local Currency Continues to Rally [theory]
Most speculators, though admittedly not all, are trend-followers. Thus, the longer the fundamental trend continues, the more trend-following speculators are attracted to what seems risk-free profit and thus ultimately the more speculative the trend becomes. As the exchange rate continues to appreciate, nominal interest rates to decline and capital inflows to continue, so the other [...]