Reported 2 months ago
Recent fluctuations in global markets highlight the instability caused by the yen carry trade, a strategy where investors borrow in Japan's low-interest rate environment to invest abroad. Following a sudden interest rate hike by the Bank of Japan, investors rapidly exited these positions, leading to significant currency shifts and a major sell-off in Japanese equities. This incident has raised concerns about aggregate leverage in the markets and could signal continued volatility as traders reassess their strategies amid changing monetary policies.
Source: YAHOO