If you borrow at 5% in Switzerland, you do so in Swiss francs, which are trading with the Aussie dollar today at a rate of 1.10. Depending on the swing of rates, you could be paying much more back, or quite possibly, coming through with a lower or negative rate of interest. In any case, the company would be taking on a great deal of risk with such a transaction, but it could be worth it.
A more striking example would be the rate differential between Japan (interest rate 0.01%) and Australia. The cheap money coming out of the Japanese markets have kept bond rates remarkably low throughout the whole world.
It works the other way too. If you are an individual living off your savings in Switzerland (or Japan) you are better off putting your money in an Australian CD to get a much more handsome rate of return. (Which many bank, in Japan at least, do offer their customers). Of course, you are taking the same risk….
Interest Rate Question ???
that%26#039;s exactly what banks did
Interest Rate Question ???
No, it does not. Look at all of the costs involved. Think.
Interest Rate Question ???
Provided of course it is a thriving business and has credit worthiness to borrow from Switzerland
No comments:
Post a Comment