Carry trade unwinds as Bank of Japan reduces bond purchases, causing yen appreciation and Mexican peso depreciation.
Carry trade unwinding continues as the yen appreciates, causing the Mexican peso to depreciate. This comes as the Bank of Japan reduces bond purchases and raises rates. The yen's strengthening against the dollar forces investors to unwind yen bets in the carry trade strategy, which involves borrowing low-interest rate currencies to invest in higher-yielding assets. The global carry trade's impact on financial markets, including US equities and Asian stocks, remains uncertain.
August 05, 2024
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