Yen carry trade affect the financial market nerves
recently, Japan's Central Bank announced the imposition of negative interest rates, excess reserve interest rate fall below 0, negative interest rate policy announced on that day, the dollar index gained nearly 1%, devaluation of Japanese yen against the dollar to 2.88%, the Nikkei 225 index surged to 2.66%. It is regrettable that, taking into account the current global economy in a liquidity trap, monetary policy failure, as investors expected Japan after the central banks and the European Central Bank's policy rates to a negative value, monetary policy has limited space, which further exacerbated the global economy faced deflation fears and excessive debt, exacerbating the problem. Facts also confirmed this is, in then of 10 a day within, dollars index once devaluation reached 4%, Yen on dollars revenge sex sharply appreciation highest range reached 8.3%, Nikkei 225 index sharply fluctuations, global main index also have again fell, crude oil, bulk commodity price also continues to innovation low, global financial markets unrest of increased makes yen, hedge currency and gold, hedge assets began by investors of sought after.
in fact, Japan has appeared three times on the economic history of negative interest rates, again showed that the rise and fall of the yen carry trade is closely related to turmoil in global financial markets.
from 1995 to 1997 the yen carry trade. Since the first half of 1995, Japan's Central Bank kept its policy rate below 1% even closer to zero when the world's lowest interest rates, appreciation of the yen against the dollar on April 19, 1995, to a second peak of 79.7. Japan interest rates close to zero, and in turn triggered the yen carry trade began to rise, international investors have borrowed yen, invested in Asia, Latin America and other emerging market economies, led to asset price bubbles in emerging market economies. However, along with the Japanese Yen depreciated against the dollar by increasing liquidation of yen carry trade began to gradually, profit-taking, the yen against the dollar after nearly 35 years to August 11, 1998 low of 147.62, immediately into a rapid rise was exacerbated by the withdrawal of capital from emerging market economies.
the yen carry trade from 1999 to 2000. The rapid spread of the financial crisis in Southeast Asia makes it difficult for a lot of yen carry trade funding spared, Japan 1990 stock and property bubble brought about by economic stagnation and bad debt problem worse. To this end, in February 1999, Japan's Central Bank raised the unsecured overnight lending rate, 0.15%, and again on March 3 of the same year moved to 0.03%. This means, after deduction of currency brokers Commission, interest rates actually drop to zero, Japan's Central Bank began to implement a policy of zero interest rates.
implementation of the zero interest rate policy which culminated in the end of December 1999 to reverse the Yen's appreciation trend. With the ease of the Southeast Asian financial crisis and the United States economy continued to recover, Yen in depreciation cycles again, the yen carry trade revived, a large number of yen carry trade funding began to flock to the United States, which gave birth to the United States of the tech-stock bubble. NASDAQ fast rises to 2,632 points on October 18, 1999 March 10, 2000 to 5,132 points, NASDAQ index rising almost 1 time in the past six months times 1999 United States weaker than China's a-share stock market rose sharply are not in 1999, 2007 and 2015 's hot market in the first half, but then the NASDAQ index fell speed much more than expected.