Yen could face fresh storm as Japan vote fuels carry trade revival and BOJ policy doubts

Bloomberg (gated) report that the yen carry commerce, which collapsed final yr, might see a significant revival within the wake of Japan’s latest election, in keeping with traders.

The technique—borrowing low-yield yen to put money into higher-yielding belongings overseas—is gaining traction after Prime Minister Shigeru Ishiba misplaced his upper-house majority. The loss could push Ishiba to extend authorities spending to win over opposition assist, whereas political uncertainty might immediate the Financial institution of Japan to gradual its tempo of fee hikes—each of which might weaken the yen and favour carry trades.

There may be extra on the Bloomberg piece, however thats the gist of it.

The yen has surged because the election, early adopters of the renewed carry commerce will probably be nursing FX losses.

This text was written by Eamonn Sheridan at investinglive.com.



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