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"The
negative interest rate experiment seems to be backfiring," said
Gundlach, who helps oversee $95 billion for Los Angeles-based
DoubleLine. "The best evidence of negative interest rates
backfiring is the yen versus the dollar and the Nikkei."
The dollar slumped against the yen again on Thursday in the wake
of minutes from the last U.S. Federal Reserve meeting and
expectations the Bank of Japan was unlikely to intervene, while
global growth concerns weighed on equities.
In January, Japan joined the European Central Bank and the
central banks of Sweden, Denmark and Switzerland in negative
territory, in effort to boost their economies partly by way of
weakening currencies.
The dollar was last down 1.4 percent at 108.01, its biggest
daily percentage drop in two months. The decline put the
greenback's losses at about 10 percent for the year.
Gundlach said: "Negative interest rates are not just
deflationary, they are deflation. You lose money."
In both 2015 and 2014 Gundlach made correct predictions on
market events. In 2015, he forecast that oil prices would
plunge, junk bonds would live up to their name and China's
slowing economy would pressure emerging markets. In 2014, he
forecast that U.S. Treasury yields would fall, rather than rise
as many others had expected.
(Reporting By Jennifer Ablan; Editing by David Gregorio)
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