Strong dollar behind economic paradigm breakdown – Shin
BIS head of research points to failure of covered interest parity post-2008
The US dollar appears to be behind the failure of a textbook economic relationship post-2008, said Hyun Song Shin, economic adviser and head of research at the Bank for International Settlements, on June 10.
Covered interest parity (CIP) dictates the exchange rate between two currencies adjusts to eliminate any opportunity for arbitrage between the nominal interest rates prevailing in the two countries.
This held with few exceptions before 2008, but has since broken down, Shin told a conference
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