Alpha Circle Nsukka | Charts, Psychology & Market Discussions - Page 95

Carry trade demand continues to support higher-yielding currencies as investors borrow low-interest-rate Japanese yen to invest in currencies offering better returns, such as the USD, AUD, NZD, and GBP. The wide interest rate gap keeps these trades attractive, putting downward pressure on the yen and supporting higher-yielding currencies. However, increased market uncertainty or a shift in Bank of Japan policy could trigger a rapid unwinding of these positions, leading to a stronger yen and heightened FX market volatility.

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@youngancient - 6 hours ago

Quoted - mitchei_1

Yeah

Thanks for the update I appreciate

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@youngancient - 6 hours ago

Quoted - mitchei_1

Carry trade demand continues to support higher-yielding currencies as investors borrow low-interest-rate Japanese yen to invest in currencies offering better returns, such as the USD, AUD, NZD, and GBP. The wide interest rate gap keeps these trades attractive, putting downward pressure on the yen and supporting higher-yielding currencies. However, increased market uncertainty or a shift in Bank of Japan policy could trigger a rapid unwinding of these positions, leading to a stronger yen and heightened FX market volatility.

The main thing you should know is that Japan keeps interest rates near zero (or very low), so borrowing yen is "cheap"

Investors borrow yen, convert it to USD/AUD/NZD/GBP, and invest in assets offering higher yields (bonds, deposits, etc.)

They pocket the difference between what they pay to borrow yen and what they earn on the higher-yielding currency — this is the "carry"

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@mitchei_1 - 3 hours ago

Quoted - youngancient

The main thing you should know is that Japan keeps interest rates near zero (or very low), so borrowing yen is "cheap"

Investors borrow yen, convert it to USD/AUD/NZD/GBP, and invest in assets offering higher yields (bonds, deposits, etc.)

They pocket the difference between what they pay to borrow yen and what they earn on the higher-yielding currency — this is the "carry"

Sharp

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