Speculation of yen carry trade unwinding causing market disruptions, but impact has been mild

From Investing.com: 2024-08-25 05:01:02

Speculation about yen carry trade unwinding led to concerns about market disruptions, but the impact has been relatively mild. The strategy involves borrowing yen at low rates and investing in higher yielding assets due to Japan’s low interest rates. Despite fears, the market has not seen lasting damage, with analysts characterizing it as a “heart palpitation, not a coronary.”

Market commentary highlighted fears about yen carry trade unwinding causing disruptions, leading to increased equity volatilities. However, analysts suggest that the market has not suffered long-term damage from the unwind. Abundant capital, strong liquidity, and central banks’ effective tools have prevented catastrophic outcomes, supporting global financial system resilience.



Read more at Investing.com: What happened to Yen carry trade? By Investing.com