Why the Japanese Yen Is So Volatile

There were plenty of reasons for the global market selloff on Aug. 5, including premature worries of a US slowdown and fears of an artificial intelligence bubble. But one of the main culprits was the unwinding of a popular yen-centered carry trade. The trouble began when the yen’s value started rising after the Bank of Japan hiked interest rates for a second time this year. Now, as the dust settles, investors and Japanese business owners alike are questioning the yen’s role in the global economy.

For more Bloomberg reporting on the yen carry trade:
https://www.bloomberg.com/news/articles/2024-08-21/yen-carry-trade-data-suggest-cautious-return-of-retail-investors?utm_medium=social&utm_source=youtube&utm_campaign=originals&utm_content=article

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00:00 Introduction
00:48 Yen and interest rates
02:11 BOJ’s July rate hike
03:10 Carry trade and the ‘Great Unwind’, explained
04:46 Impact on everyday Japanese
07:41 What this means for the yen and global markets
09:15 Uncertainty prevails

#japan
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42 Comments

  1. So interest rates have been low in Japan because of a slugging economy, doesn't that admit that the government is in full control of interest rates? Because i don't think the market would keep interest rates low when japans debt to gdp ratio is over 250%

  2. But, due to unruliness or poor behavior there has been, as of late, major pushback against tourism here in Japan. It's a move that simply can't be made while major fumbles like this are occuring.

  3. Unique to Japan how its government has been able to rely almost exclusively on debt for 25 years with little or no reaction (or even awareness) from the general population, when if, say, the German government tried it, there'd be protests and uproar. Cue the kneejerk reaction "Oh it's ok, because it's domestic debt" – point is, that's not the whole point.

  4. You are kidding, the yen maybe cheap but the prices of food and goods are very expensive, so the cheap yen is not a blessing to the tourists.

  5. Totally fake news, dunt y'all know jpn's GNP has been much much bigger than its GDP for decades? lol sluggish jpn economy? Boooooooo!

  6. Totally fake news, dunt y'all know jpn's GNP has been much much bigger than its GDP for decades? lol sluggish jpn economy? Boooooooo!

  7. Carry traders in Iceland lost everything in 2008 crash. They borrowed from Japan and invested in ICeland. and then Iceland crashed famously and these investors lost everything………… moral of the story. This investement is far from safe.

  8. This article or video just a propaganda by US or Western world to manipulate Japanese Economy.. Similar to PLAZA accord..So, I hope Japanese people are smart enough this time