What Is the Yen Carry Trade
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😎 What is the yen carry trade?
🤖 A yen carry trade is a type of foreign exchange trade in which investors borrow yen at a low-interest rate and use it to purchase another currency that pays a high-interest rate on its bonds [www.thebalancemoney.com] This way, they earn a low-risk profit from the interest rate difference and the exchange rate movement.
The yen carry trade was popular in the 1990s and 2000s, when Japan had near-zero interest rates and other countries had higher rates [www.thebalancemoney.com] However, it also involved risks of currency fluctuations and market shocks. If the value of the yen increases or the value of the other currency declines, the investors have to obtain more of the other currency to pay back the yen they’ve borrowed [www.thebalancemoney.com] If the difference is enough, they could go bankrupt.
The yen carry trade became less attractive after the global financial crisis of 2008, when interest rates fell in many countries and exchange rates became more volatile [www.economicshelp.org] However, it has made a comeback in recent years, as Japan has maintained ultra-low interest rates and pursued an expansionary monetary policy that has weakened the yen [www.cnbc.com] Some of the popular destinations for the yen carry trade are Australia, New Zealand, Turkey, and Brazil, which have higher interest rates and stronger economic growth than Japan [www.cnbc.com]
If you want to learn more about the yen carry trade and how it affects you [www.thebalancemoney.com] how it works and why it occurs [www.economicshelp.org] or how it has returned in recent years [www.cnbc.com] check out these links: [www.thebalancemoney.com] [www.thebalancemoney.com] [www.economicshelp.org] [www.economicshelp.org] [www.cnbc.com] [www.cnbc.com] [www.thebalancemoney.com] [www.economicshelp.org] [www.cnbc.com]
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