The Yen Carry Trade Submitted by Brent Johnson and Michael Peregrine of Santiago Capital. Executive Summary Currency carry trades, while seemingly straightforward, carry significant risks due to their reliance on interest rate differentials between countries. Investors borrow in a low-interest currency, like the yen, to invest in higher-yielding assets. These trades are often unhedged and leveraged, magnifying potential profits but also exposing investors to substantial risks, especially if interest rates or currency values shift unexpectedly. The biggest risk is the implicit assumption that these differentials will remain stable, which rarely holds true over the long term. Historically, even fixed currency… — Continue at ZeroHedge News : Read More
