Bank of Japan, in a Surprise, Adopts Negative Interest Rate

Re:Bank of Japan, in a Surprise, Adopts Negative Interest Rate by neximo4 on Tuesday February 02, 2016 @08:07AM (#11019179)

> Deflation does not mean that exchange rate of Japanese yen increases relative to other currencies.

There is evidence that shows over the long run a currency's exchange rate will be favoured against those with a positive inflation rate differential.

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Re:Bank of Japan, in a Surprise, Adopts Negative Interest Rate by nabla9 on Tuesday February 02, 2016 @08:20AM (#11019237)

Of course it does, but the effect is not linear and its mostly correlation caused by underlying mechanisms.

Too much inflation is usually sign of problems in the economy. Too low inflation is also sign of problems. The optimum rate of inflation is usually somewhere 1-4%.

Strong currency is not good thing in itself. It hurts exports and makes foreign goods cheaper.

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