$SIA (C6L.SG)$ : Interest rate disparity could be the caused...
$SIA (C6L.SG)$ : Interest rate disparity could be the caused of Black Monday Market Crashed.
Most BB could be borrowing a huge amount of Yen at near zero interest to purchase and enjoy high paying interest US dollars and eventually, purchasing huge amount of US AI stocks and Bitcoin currency.
Why is that so ? Plucking money from thin air.
Borrowing cheap money to buy and enjoy high interest paying products, why not ? And when Japanese faces inflation, naturally, BOJ will need to raise their near zero interest rate higher.
Thus, borrowers of Japanese Yen, will now have to pay back high interest for the amount of yen they borrowed during their earlier years now !
Coincidentally, this comes in very timely, as the Federal Reserve Chairman Jerome Powell is expected to ease rate next month.
As a result, long dollars and it's stocks, no longer looks attractive. Thereby, forcing BB to unwind their position in a very big scale manner.
Thus, causing US stocks and US$ to come under tremendous selling pressure.
On the other hand, to pay back the borrowed Yen at a higher interest rates or buy back Yen at a higher price now, the BB may have to cut lost instead.
Genius idea isn't it ! Just my observation, and enhanced your analytical skills and sharing my knowledge only. I can be wrong, not suitable for trading. I am not a financial experts.
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Timtan85 : They will sell on rallies like this. When its good chance now to get out of their carry trades
明 Meng OP : Can not see my post.
明 Meng OP Timtan85 : Yes, for the time being. However, at the medium term, interest rate ease is good for stocks.