Economics: Impact of the yen carry trade

Low Japanese interest rates has meant the yen carry trade has been strong but economists believe wit...

Low Japanese interest rates has meant the yen carry trade has been strong but economists believe with rates in the region now set to rise, yen borrowing levels are likely to reduce. According to New Star’s investment strategist Simon Ward, the term carry trade refers to the practice of borrowing money in a low interest rate environment only to invest it in something with high yields or returns. With yen interest rates having been maintained at a low level for such a long time, many people have been borrowing the currency with the effect of creating a large amount of liquidity. Chris Iggo,...