Angle: The yen reversal reverses the carry trade and spreads to other currencies

July 30, 2024 1:44 PM GMT+9 (some excerpts)

Carry trade, which gained popularity this year due to a sharp rise in the yen in the foreign exchange market, was suddenly reversed, and the aftermath is spreading to other currencies such as the Swiss franc, Australian dollar, and Mexican peso.
The direct reason for the reversal of the yen was exchange intervention by the Japanese government and the Bank of Japan, which has been observed in the market with a total amount of less than 40 billion dollars, but with this, autonomous momentum was generated in yen purchases. The yen, which had been sold until around 1 dollar = 162 yen in the middle of this month, jumped to around 153 yen, and the two-week rate of increase recorded the biggest this year.
What market participants point out as a background is the observation that the interest rate difference between Japan and the US will shrink soon, and concerns that if former President Trump, the Republican candidate, is elected in the US presidential election in November, a new currency devaluation competition will begin.