The Japanese Yen carry trade involves borrowing at low interest rates in Japan to invest in higher-yielding assets abroad, here are some things to know about it.
1
The Japanese yen hit mid-January highs around 145.28 in Monday's intraday deals, extending its recent appreciation against the US dollar.
2
The appreciation is partly driven by the Bank of Japan's (BoJ) 15-basis points rate hike to 0.25 per cent last week.
3
The BOJ announced it would halve its monthly bond purchases over the next couple of years to strengthen the currency and boost economic growth.
4
The Japanese Yen has long been considered a safe-haven currency and a favorite among carry-funding options for global investors.
5
Analysts at Barclays believe that the Japanese currency was the most overbought among G10 majors.
6
Nikkei tumbled almost 13 per cent on Monday, and other Asian markets like Kospi and Taiwan slumped over 8 per cent each.
7
A stronger Yen could prompt some selling by these investors, potentially impacting the Indian market.