Currencies
Carry-Trade Blowup Haunts Markets Rattled by Rapid Unwind
- Yen surge sowed havoc as traders dumped assets to repay loans
- Brief global crash shows risks fanned by Japan’s low rates
This article is for subscribers only.
By now, last Monday’s global market meltdown looks more like a brief tremor, a fleeting panic unleashed by a small policy shift from the Bank of Japan and resurgent fears of a US recession.
But the way it unfolded so rapidly — and just as quickly faded out — is exposing how vulnerable markets are to a strategy that hedge funds exploited to bankroll hundreds of billions of dollars of bets in virtually every corner of the world.