The yen carry trade

This month, we focus on the yen carry trade: yes, that trade that hit so many hedge funds all bundled up in the same direction in early March. Brian Hoegee, managing director of Global Trader Asia, picks apart what the trade involves, whether it caused market turbulence and where to now for the yen and investors taking bets on it...

Considering the volatility in global markets of late, pundits have been eagerly looking to blame someone or some event, and it appears to be the yen carry trade once again. Although the Chinese market fell 9% and was the catalyst that spurred a global equities sell-off, the yen carry trade has been receiving most of the blame for the downward move in prices.

Interest rates have been at or around 0% in Japan since the early 1990s and the concept of 'carry trade' has been around for quite some time

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