Currency Carry Trade—Learning the Basics
Based on a latest Bloomberg report on 08/01/2023, traders using USD/JPY pair for carry trade purposes may see big changes coming, hopefully slowly: [7] Seven years since Japan embarked on a highly unorthodox monetary experiment that helped pin down borrowing costs on Wall Street and beyond , the nation’s central bank is loosening its vice-like grip on domestic bond yields — with potentially profound consequences for high finance and households across the US (hint: think Japanese buyers bringing their huge pools of overseas investments back home for higher returns) . Note that this article was originally posted in 2017 for learning the basics of currency carry trade. What is a yen carry trade? (YouTube link ) Both retail and institutional investors want to acquire an asset in anticipation of its price appreciation. However, the institutional investors is more complicated: It is not only about the asset that is to be purchased, but it is also about how the purchase is funded...
