SOR does a V-turn after hitting bottom

SOR slid dramatically to 0.258% on Aug 23, arguably the historical low of all times, then sprang up again to above 0.3%. Incidentally, the 3-month USD Libor rate is also at 0.3% and has been falling and staying low. Exchange rate wise, USD/SGD has been stable at around 1.35 and probably did not play a big factor in the action of SOR.

The US economy is not looking good at the moment, leading to the federal reserve making the statement that they “will take more aggressive steps to boost growth if the economic outlook deteriorated significantly”, which in other words means maintaining low interest rates. Not everyone agrees to doing so though. According to Jim Rogers, “Everyone should be raising interest rates, they are too low worldwide”. He also says “The idea that you can solve a problem of too much debt and too much consumption, with more debt and more consumption, defies comprehension”. Sounds like a valid point there. Sounds like more inflation in the making, unless the economy remains subdued. The recent rise in gold price seems to support the point on inflation, or it could point to “speculation that demand for raw materials will increase as the global economy recovers”. Either way, gold seems to win.

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