The bottom interest rates by currency chaos – Västerbotten Courier

Economy. exchanges and currencies have begun to stabilize after what is called the worst currency chaos of modern times. The downward pressure on interest rates is, however, in itself, with new lows in many places.

Facts

Low interest rates create problems for pension and fund managers to achieve their return targets, which can eventually cripple future retirees.

the risk is also evident that low interest rates build up asset bubbles in the economy that can crack and have serious repercussions. Low interest rates provide cheap credit that push up the prices of both property and shares.

For the States means that cheap financing that it quickly builds up new mountains of debt that could become problematic in the future. It also reduces the pressure on politicians to reform and strengthen public finances.

Source: Nordea.

Friday’s extreme turbulence in the currency market, after it was clear that the British have voted for a European exit, was the shaky most days of the modern era in the currency market, beats analysts at Bank of America Merrill Lynch settled. No similar took place in the foreign exchange market during the global financial crisis in autumn 2008.

Should take precautions

In a report cited by the Financial Times said the bank’s analysts, investors should be alert to the risk of infection and take precautions where it may be needed.

Above all, it has been the pound which has dropped against currencies that are considered safer in times of trouble, as the yen and Swiss franc. While the dollar and the euro has appreciated.

The krona has strengthened against the pound, but at the same time in the company of many other smaller currencies have fallen against world currencies.

The atmosphere of crisis has also had its claws in the banking sector, double-digit negative price developments for many heavyweights. Both the British and the Japanese central bank has provided the ailing banks with billions in liquidity support in turmoil after the British EU referendum.

“An expected reaction”

The downward pressure on market interest rates, which increased after the British referendum, while holding itself. The interest rate on a two-year Swedish government bonds remain at a record low of 0.66 percent, a level it fell to Monday’s turbulence. The ten-year yield starts while approaching new lows falling to 0.36 percent.

In Japan, the ten-year rate recorded at the record low of -0.22 percent. Even Japan’s 40-year rate is approaching zero, with a low of plus 0.08 percent.

– This is an expected reaction. In a more uncertain world buys safe assets, and it depresses interest rates, says Andreas Wallstrom, chief analyst at Nordea.