Reported 2 months ago
This week's global market chaos was partly triggered by the unwinding of carry trades, a strategy where investors borrow in low-interest currencies like the Japanese yen to invest in higher-return markets. As Japan raised its interest rates, the yen appreciated against the dollar, forcing traders to sell off risky assets to cover increased borrowing costs. While markets have since recovered some losses, the rapid sell-off highlighted the risks associated with this trading strategy, especially in volatile market conditions.
Source: YAHOO