By Ankur Banerjee and Rocky Swift
SINGAPORE, Sept 8 (Reuters) - A blistering rally in the ******* anese yen ahead of an expected interest rate hike from the Bank of ******* an next week is upending the long-established and lucrative carry trade, as investors rethink the path ahead for the volatile currency.
Early hints of capital repatriation and expectations of a faster pace of monetary tightening by the BOJ along with U.S. pressure are combining to boost the yen, which hit 40-year lows in July, triggering a joint U.S.-Japan intervention.
The spike is also spurring an unwinding of the popular carry trade, which involves borrowing yen at a low cost to invest in other currencies and ******* ets offering higher yields, as traders brace for central bank meetings in ******* an and the U.S.
"The carry trade is vulnerable because this unwind is happening before the BOJ has even delivered its expected hike," said Charu Chanana, chief investment strategist at Saxo.
#bank
SINGAPORE, Sept 8 (Reuters) - A blistering rally in the ******* anese yen ahead of an expected interest rate hike from the Bank of ******* an next week is upending the long-established and lucrative carry trade, as investors rethink the path ahead for the volatile currency.
Early hints of capital repatriation and expectations of a faster pace of monetary tightening by the BOJ along with U.S. pressure are combining to boost the yen, which hit 40-year lows in July, triggering a joint U.S.-Japan intervention.
The spike is also spurring an unwinding of the popular carry trade, which involves borrowing yen at a low cost to invest in other currencies and ******* ets offering higher yields, as traders brace for central bank meetings in ******* an and the U.S.
"The carry trade is vulnerable because this unwind is happening before the BOJ has even delivered its expected hike," said Charu Chanana, chief investment strategist at Saxo.
#bank
2 months ago
