Why The Japanese Yen 'Carry Trade' Is Making Headlines

Why The Japanese Yen 'Carry Trade' Is Making Headlines: A Deep Dive Into Recent Market Trends And Global Markets

A "Carry Trade" involves borrowing funds in a currency with low-interest rates and investing them in assets denominated in a currency with higher interest rates.

[{"selector":"#anim-957bbab8-c3a0-4456-9575-66d4e88ed7a7 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(0%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] [{"selector":"#anim-b944329e-c761-4622-8723-327994fe3f68","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-47cb6070-664a-4b85-8925-12189fcf7c59","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}]

The Japanese Yen has been a popular funding currency for carry trades due to Japan's historically low-interest rates and the Yen's status as a safe-haven currency.

[{"selector":"#anim-a56272ff-c382-4406-ac72-71fc2c665fd1 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(34.18973204692105%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-127967c5-835c-48da-b871-40c311e17544","keyframes":{"opacity":[1,1]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-4d6c49af-f970-453f-8660-259c84641838","keyframes":{"transform":["scale(3)","scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}]

Over the past three weeks, the Japanese Yen has appreciated by approximately 10% against the US Dollar.

[{"selector":"#anim-1d3031fe-1b12-4964-bf1b-2f5b16625c72 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate3d(-49.3408203645609%, 0, 0)","translate3d(0%, 0, 0)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"both"}] [{"selector":"#anim-65a28e2f-be7f-49e2-9893-eb7d649bbcac","keyframes":{"transform":["translate3d(-115.55555%, 0px, 0)","translate3d(0px, 0px, 0)"]},"delay":0,"duration":1000,"easing":"cubic-bezier(.2, 0, .8, 1)","fill":"both"}] [{"selector":"#anim-88917ff6-4836-48fa-a4aa-108d4a4ab500","keyframes":{"transform":["rotateZ(-180deg)","rotateZ(0deg)"]},"delay":0,"duration":1000,"easing":"cubic-bezier(.2, 0, .5, 1)","fill":"forwards"}]

[{"selector":"#anim-ae31715f-8023-4f88-a650-eedd2a3b3607 [data-leaf-element=\"true\"]","keyframes":{"transform":["translate(24.9512317436531%, 0%) scale(1.5)","translate(0%, 0%) scale(1)"]},"delay":0,"duration":2000,"easing":"cubic-bezier(.3,0,.55,1)","fill":"forwards"}] [{"selector":"#anim-8a0ff34e-572d-481c-9483-c984fb712e04","keyframes":{"transform":["scale(1)","scale(1.5)","scale(0.95)","scale(1)"],"offset":[0,0.33,0.66,1]},"delay":0,"duration":1450,"easing":"ease-in-out","fill":"both","iterations":1}] The current scenario draws parallels with the 2007-08 financial crisis, where the unwinding of carry trades contributed to market turmoil. Learn more