As a result of Governor Ueda holding a hawkish press conference, not only did the Nikkei Average crash, but it also caused stock depreciation around the world.
Does the Bank of Japan have enough influence to cause stock depreciation around the world? I think there are many people who thought that.
In countries where interest rates are high, such as the United States, it is necessary to pay a high interest rate when trying to directly raise US dollars.
However, like JapanIf it is a country with low interest rates, procure Japanese yen at a low interest rateYou can do it.
Therefore, hedge funds and institutional investors utilize the Japanese short-term financial market to raise Japanese yen at low interest rates.The raised Japanese yen is converted into dollars, and returns are accumulated by investing in risk assets such as US stocks.
Naturally, this transaction will promote the appreciation of the dollar and the depreciation of the yen. The existence of this carry trade was the main reason why the dollar yen rose to 162 yen. That's why the Japan-US interest rate difference was important.
However, like the Bank of Japan this timeA declaration to raise interest rates on the Japanese yen & a rapid dollar depreciation and yen appreciation event occurredWhat would happen if I did?
Losses due to exchange became larger than returns obtained from financial assets held, and the total amount of yen raised...