One can read everywhere( even in regional non economics newspapers) these days that carry traders causes a weakening yen .
That is not true.
What cause a weak yen is of course fundamental in terms of low short term interest rates and that carry traders playing with it.
But carry trade is maximum 20% of the whole yen short position.
did you know that ?
SO who the hell is short yen so huge ?
Easy answer : imagine you live in japan and are retired or have some money in front of you. Are you going to be happy with a maximum 0,50% remuneration? ( even if inflation is very low)
Of course not you are going to sell your yen and buy some more exciting currencies with bigger interest rates.
And that is exactly what causes the weak yen
retired in japan represents the 2/3 of the short yen position
I dont say that if there is profit taking on yen made by carry traders retired are not gonna try to cash their change profit but this is the bigger factor of the weak yen and not the carry traders as jurnalists try to explain ( some economists too )
And do not forget japan is one of the country where you live older
That is not true.
What cause a weak yen is of course fundamental in terms of low short term interest rates and that carry traders playing with it.
But carry trade is maximum 20% of the whole yen short position.
did you know that ?
SO who the hell is short yen so huge ?
Easy answer : imagine you live in japan and are retired or have some money in front of you. Are you going to be happy with a maximum 0,50% remuneration? ( even if inflation is very low)
Of course not you are going to sell your yen and buy some more exciting currencies with bigger interest rates.
And that is exactly what causes the weak yen
retired in japan represents the 2/3 of the short yen position
I dont say that if there is profit taking on yen made by carry traders retired are not gonna try to cash their change profit but this is the bigger factor of the weak yen and not the carry traders as jurnalists try to explain ( some economists too )
And do not forget japan is one of the country where you live older