Dinar Guru, who calls himself a “world-class” real estate consultant has been on the receiving end of many a Twitter kerfuffle recently. He has been criticized for some of his comments regarding the slow pace of Asian growth and the possibility of a US slowdown. Frank dated back to 2021 when he first started using Twitter. So it is fair to say that Dinar Gurus has been on the receiving end of quite a few barfuff moments. My take is that as far as his ability to influence the market goes…nothing.
So let us get down to business… Frank and Dinar guru have a good thing going here. The two share a vision of the future of the FX market and its effect on world markets. Frank calls his observations and analyses “ground truth”, which we can loosely call the pulse of the global economy. His conviction that the exchange rate between the US Dollar and the Japanese Yen will remain low while the Euro remains at high-interest rates and the British Pound sinks is well-founded.
Of course, no one can make an accurate prediction of where the currency rates are going. The general sentiment expressed in the financial community is that the exchange rate between the US Dollar and the Japanese Yen is set to stay low or moderate for quite some time. This is based primarily on the view that there will be a recovery in the UK and Europe after their recent banking problems. The rest of the world is taking this issue very seriously… The slowing of world growth and stock markets has prompted central banks to keep interest rates low to help stoke economic recovery.
At the same time, the fed is printing money at a rapid pace to try to stimulate economic recovery. Interest rates are still meager in the United States. However, it is widely expected that they will continue to remain that way for some time. In addition to the fed, the federal government is printing money to buy back bonds, mortgage-backed securities, and municipal bonds. All of this is pumping up the money supply and reducing the risk to savers and investors. One could argue that by keeping interest rates so low, the government artificially keeps currency rates from increasing.
The argument that I am about to make is based on the assumption that the fed injects any stimulus at all into the market. If so, then why haven’t the rates gone up yet? They certainly should have gone up before this latest round of Quantitative Easing. Perhaps they are waiting until rates start rising again so that they can regain control of the market. Even if this is the case, why would anyone want to buy up bonds when they have been trading with the expectation that they will go up?
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Of course, the simple answer is that nobody wants to lose their shirt in the forex markets. People want to make a profit, and they are prepared to take risks to do it. This is why we see so many people jumping on the currency trading bandwagon, buying up shares and bonds even when they are unlikely to go up in value. It is not uncommon to hear traders saying that they expect currency rates to go up around the end of this week.