Venkatachalam Shunmugam, 08 August 2010

If the base rate rises, all things being equal, the exchange rate is expected to rise and bond prices to fall. This column argues that, during a financial crisis, such relationships between asset classes go haywire. When this happens, it says governments (including central banks) must provide strong signals to the market and make sure that they pick up the right signals from the market themselves.

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