The post What is carry trade? Yen carry trade explained & its impact appeared on BitcoinEthereumNews.com.

As markets tumbled on August 5, many asked: what is carry trade? Discover how this financial strategy quietly fueled the chaos, leading to staggering losses globally. August 5, 2023, will go down as one of the most volatile days in recent financial history. It was a day when the markets shook, and investors held their breath as billions of dollars were wiped out in mere hours.  Dubbed ‘Crypto Black Monday,’ the crypto market saw a massive sell-off, with the total market cap plunging from $2.16 trillion on August 4 to a staggering low of $1.78 on August 5, a decline of nearly 18%.  But the shockwaves weren’t confined to the crypto world. Major global stock indices, like the NASDAQ100 in the U.S., FTSE100 in the UK, and India’s NIFTY50, experienced sharp declines that left investors reeling.  Japan’s Nikkei225 bore the brunt, plummeting nearly 12.5% in a single trading session – the steepest fall since 1987. It was a day of red across the boards. While there were numerous reasons for this market turmoil – from fears of a looming U.S. recession to rising geopolitical tensions in West Asia – one factor stood out among the rest: the unwinding of the yen carry trade.  This term might sound complex, but it’s crucial to understand the domino effect that led to the global financial tremor. So, what does carry trade mean, and how does it wield so much power over the markets? Let’s dive into this concept, break it down, and explore how it played a huge role in the market chaos. What is carry trade? The term “carry trade” might sound fancy, but it’s actually a pretty simple concept once you break it down.  Imagine borrowing money at a super low interest rate from one country and then investing that borrowed…

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Filed under: News - @ August 11, 2024 2:10 am