Rodrigo Rato, outgoing president of the International Monetary Fund ("IMF") recently offered his two cents on developments in the forex markets.  He began by cautioning against "excessive volatility," or the rapid fluctuations which have recently afflicted many of the world’s major currencies.  Next, he suggested that the Dollar has moved from being massively overvalued to being massively undervalued. In other words, it is his assessment that the Dollar has depreciated far too rapidly over the last few years.  Finally, he suggested that a tightening of Japanese monetary policy would be in the best interest of global economic stability.  As Rato is no doubt aware, higher Japanese interest rates would put an end to the carry trade, and drive the Yen upwards in value.  The Financial Times reports:

The outgoing IMF chief also hints at unease about Japan’s yen, which remains weak in part because of ultra-low interest rates. “Normalisation of monetary policy in Japan is an important medium-term objective.”

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