How was YEN a major part for the big market fall? 👇

The yen carry trade is shaped by a unique mix of economic conditions in Japan and globally. Japan continues to maintain ultra-low interest rates, making the yen an attractive currency for carry trade strategies. Investors are capitalizing on this by borrowing yen at minimal costs and investing in assets denominated in currencies like the US dollar, where interest rates are significantly higher.
However, the situation is increasingly complex. Japan is facing rising inflation, prompting speculation that the Bank of Japan (BoJ) might reconsider its long-standing accommodative monetary policy. If the BoJ signals a shift towards tightening, even subtly, it could lead to a strengthening of the yen. This potential appreciation of the yen is a key risk for carry traders, as it would increase the cost of repaying yen-denominated loans, potentially erasing profits.
Moreover, global financial markets are experiencing volatility due to concerns over inflation, geopolitical tensions, and the economic outlook of major economies like the U.S. and China. Such instability could lead to sudden shifts in currency markets, further amplifying the risks associated with the yen carry trade
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