Yen Carry Trade
Printed From: The Equity Desk
Category: Economy, Markets and commodities
Forum Name: Global Economies - Where are they going?
Forum Discription: If India is shining.Is the Sun setting in the west?Discuss how India could be affected if global economies crack. In case that happens is there a safe haven for Indian Investors?
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1141
Printed Date: 28/Apr/2024 at 11:34am
Topic: Yen Carry Trade
Posted By: PrashantS
Subject: Yen Carry Trade
Date Posted: 19/Aug/2007 at 1:05am
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Source : http://www.financialweek.com/apps/pbcs.dll/article?AID=/20070813/REG/70810038/1006/BANKING&template=printart _______________________________________________ The Yen carry trade, which by some estimates could have $1 trillion tied up in it, appears poised to be the next market taken down by the credit meltdown. And corporations may be unexpected—and direct—victims of a collapse to the extent they try to act like day-traders with a portion of their cash balance but are late to the game. As practiced for years now by hedge funds, the yen carry trade involves borrowing yen at low interest rates and investing in higher-yielding assets elsewhere around the world. The strategy is also used by ordinary Japanese citizens looking for a better return on their savings than they get in Japan’s traditionally low-interest-rate environment. But in a recent report, Richard Bernstein, chief investment strategist at Merrill Lynch, said he believed that a third group—companies—has also been engaged in the yen carry trade. “It seems as though corporations have used the yen carry trade as a cheap source of short-term financing,” he wrote. Mr. Bernstein mentioned that it was difficult to name names of companies that were actively pursuing such a strategy, but that it might amount to a ticking time bomb for their investors. “Credit has an insidious way of boosting growth, and its effects invariably appear in places that investors least expect,” he said. “Corporate balance sheets might be one of those places,” he added. The yen carry trade appears to be popular among companies in South Korea. Earlier this month, the Bank of Korea said it would restrict companies from borrowing in foreign currencies. The yen has dropped 26% against the won since 2005, which makes Korean exports less competitive with Japan’s. Last week the Bank of Korea raised interest rates to 5%, the second hike in two months, as a way of staving off asset bubbles. The head of a currency management group at one bank confirmed that he had corporate clients, whom he would not name, engaged in the carry trade, and he added that he did not think it was the smartest of maneuvers for companies. “The carry trade is a very naive way to trade,” he said. “In an environment of falling volatility, rising certainty and lower interest rates, you add a couple of percent return to cash balances. But when you get any upset in the market, you get big volatility,” he added, which could amount to significant balance-sheet losses. A spokesman at one major bank, who did not want to be identified, said that it recommends that its corporate clients not participate in the yen carry trade, although “it certainly comes up in conversations.” And more volatility looks like an increasingly likely possibility in the coming weeks, as the yen has strengthened against the dollar and other currencies as the subprime mortgage crisis has affected the broader credit market and created volatility in the stock market. “Pressure to buy yen remains strong as investors seek to unwind their yen carry-trade transactions and move away from risky assets amid the ongoing turmoil in the stock and other financial markets,” said Tomoko Fujii, senior economist and strategist of Bank of America in Tokyo, in a market commentary. Furthermore, said Ms. Fujii, the Bank of Japan is meeting on August 22 and 23, and it is expected to raise rates, a move that will further impact the carry trade. “The yen strengthened following the previous monetary tightening in February, and may do likewise this time around,” she said. Ms. Fujii predicts that the yen may reach new highs later this month, strengthening to 117 against the dollar. One dollar is currently equal to 119 yen. A month ago, a dollar bought 123 yen. “Given that we’re at the start of what will be a big unwinding, we will see the yen go higher,” predicted Tim Lee, founder of financial consultancy Pi Economics. Mr. Lee predicts a doomsday scenario if a great unwinding does happen, including a world recession, since many individuals around the world are engaged in the carry trade. “You’ll see in Latvia, for example, individuals taking out a mortgage in yen. It’s all financed effectively out of the carry trade,” he said. Mr. Lee said that one hint that corporations may be involved in the carry trade is that the recent unwinding hasn’t occurred as quickly as he anticipated. “Hedge funds are quick to pull the trigger” and unwind their carry-trade positions, he said. “Quite a lot of it might not be entities that respond too quickly to the market movement, including corporations,” he said. Amarjit Sahota, chief global currency strategist at HiFX, an international foreign exchange consultancy managing $35 billion, attributes the recent unwinding in the carry trade to the hysteria in the market. “When we start hearing stories about hedge funds going under, risk aversion is the main theme,” he said, noting that there was a similar pullback when Chinese stocks got pummeled in February. Mr. Sahota predicts that the yen carry trade will continue, albeit with a “reduced appetite” going forward until the Bank of Japan raises rates. ___________________________ How much damage can this yen carry trade cause ? Anyone!!!!!!!!!!! |
Replies:
Posted By: PrashantS
Date Posted: 19/Aug/2007 at 1:08am
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What is the carry trade and why is it important ? What would happen if Japanese interest rates rose ? What are the chances of the Carry trade unwinding during 2007 ? Another reason to suspect an orderly unwinding of the carry trade is that interest rates tend to change in small steps of 0.25%, and usually these steps are well indicated beforehand through statements by the Central banks, therefore it would take a year or more of Japan raising rates in small increments and the US cutting rates in small increments for interest rates to reach a point where the carry trade is no longer feasible. So the market would have plenty of warning and opportunity to unwind. Undoubtedly even a small narrowing of the spread would hurt some financial institutions such as hedge funds which are known for highly leveraging their positions, and which may be caught out. But most financial institutions such as Banks do not heavily leverage their carry trade positions. |
Posted By: PrashantS
Date Posted: 19/Aug/2007 at 1:13am
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Japan's Next Export Is Higher Interest Rates: William Pesek Jr. May 29 (Bloomberg) -- In Mumbai in January, I asked India's No. 2 central bank official the same question I pose to every policy maker these days: What does Japan's revival mean for Asia? Without a moment's hesitation, Rakesh Mohan replied: ``The yen-carry trade will make things interesting.'' It wasn't the response one expected. I assumed the man who may be the next governor of the Reserve Bank of India would talk about increased demand for Indian goods. Or that he'd mention that Japan's recovery may stabilize Asia's economic environment. Mohan's focus on the yen now seems quite prescient in light of India's recent experience, and that of many Asian stock markets. The unwinding of yen-carry trades exacerbated sell-offs that started with a slide in the U.S. dollar and falling commodity prices. Last week, India's Sensitive Index briefly plunged below 10,000 for the first time in three months. Over the last decade, the trade -- which exploits the gap between ultra-low Japanese interest rates and higher ones elsewhere -- has become a staple in markets. In many cases, anyone borrowing for next to nothing in yen and parking the funds in, say, higher-yielding U.S. Treasuries or higher-returning Indian stocks found it to be a sure bet. That's about to change as Japan's recovery leads to higher rates in the world's second-biggest economy. Japan's consumer prices rose for a sixth month in April, increasing the odds its central bank may soon raise borrowing costs for the first time since August 2000. Bonds fell on May 26 on news that core consumer prices, which exclude fresh food, increased 0.5 percent last month from a year earlier. Yen-Carry Trade Short-term rates and bond yields in Japan have been negligible for so long that investors take them for granted. Japanese recoveries tend to fizzle faster than they emerge. The Bank of Japan hasn't built much credibility in markets, having failed for some 15 years to stabilize growth and avoid deflation. Yet Japan's long-awaited return to the economic plus column is here. And even if the country doesn't grow 5 percent a year, there can be little doubt that the BOJ will raise rates from zero percent. The central bank is keen to return some normalcy to Japan's monetary policy. Global markets have been slow to grasp the specter of higher Japanese rates. In recent weeks, though, surprisingly large moves in markets from Iceland to Turkey to India have been partly attributed to the unwinding of yen trades. And where yen- volatility is concerned, we probably haven't seen anything yet. Bad Intelligence What makes the yen-carry trade so worrisome -- and easy to dismiss as a potential problem for markets -- is that no one really knows how big it is. It's not like the BOJ has credible intelligence on how many companies, hedge funds or mutual funds borrowed in yen -- or how much -- and put the money into assets elsewhere. It would be more comforting if the Bank for International Settlements, the International Monetary Fund or the Federal Reserve Bank of New York had a better handle on all this. Who really knows how many purchases of Shanghai properties, Google Inc. shares, Zambian treasury bills, bars of gold or derivatives are related to yen borrowings? All this may sound like a conspiracy theory, yet the world has seen before how carry trades can slam markets. There was no better example than in late 1998, when Russia's debt default accelerated the implosion of Long-Term Capital Management LP. The resulting panic caused the yen, which had been weakening for years, to soar 20 percent in less than two months. Hedge Fund Uncertainty Frantic efforts to unwind yen trades led to conference calls among officials in Frankfurt, Tokyo and Washington. Policy makers wondered how big the carry trade was, how much leverage was involved and what they could do, if anything, to avoid a crash in global markets. Once things settled down and Japan's deflation worsened, the yen-carry trade was back in fashion. And with stock markets around the world returning to pre-1997 Asian crisis levels, investors sat back and watched their gains accumulate. After all, the payoff from the trade is often twofold. Traders investing yen borrowings in 10-year U.S. Treasuries enjoyed a 3 or 4 percentage-point yield difference and then benefited from the dollar's strengthening. The latter dynamic boosts profit once it is converted back to yen. Things are getting difficult again now that the yen is getting stronger, the dollar is sliding and the BOJ is itching to boost rates. On top of not knowing how big the yen-carry trade is, policy makers have the added challenge of figuring out if hedge funds will complicate things further. Rates Headed Up The number of hedge funds has increased sharply since the late 1990s. Worldwide, 8,661 hedge funds managed $1.1 trillion at the end of 2005, according to Chicago-based Hedge Fund Research Inc. The need to boost returns from quarter to quarter is driving many to take on ever more leverage. The question is what happens if oil prices continue rising, the dollar plunges, a major terrorist attack occurs, there's a bird-flu pandemic or the BOJ moves more aggressively than expected. Any sudden rush for the exits could shake up markets as rarely before. The irony of all this is rich. The world has anxiously awaited Japan's recovery, and its arrival is good news for Asia. Yet there's a catch: As Japan raises its interest rates, it may export higher borrowing costs everywhere else. |
Posted By: xbox
Date Posted: 19/Aug/2007 at 5:32am
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A market uncertainty is best chance given by almighty God to each of us. There is a ray of light at end of tunnel but let's get into it only when one have enough bread & butter to walk till the end others can take u-turn. ------------- Don't bet on pig after all bull & bear in circle. |
Posted By: India_Bull
Date Posted: 19/Aug/2007 at 5:35am
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That is good one XBOX Jee !!
------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: India_Bull
Date Posted: 19/Aug/2007 at 5:37am
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By the way congratulations for crossing 1000 on TED !!
------------- India_Bull forever Bull ! www.kapilcomedynights.com |
Posted By: BubbleVision
Date Posted: 22/Oct/2007 at 5:51pm
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If anyone is watching the carry-trades, then in the last 1 hour, carry has got murdered. Major Yen crosses are down 1-2% in less than an hour, which is huge for currencies! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 22/Oct/2007 at 6:35pm
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Bubble what if yen goes below 110 ...can this have a huge impact in the short term |
Posted By: BubbleVision
Date Posted: 23/Oct/2007 at 4:59pm
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Do you still want an answer PrashantS? ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 08/Nov/2007 at 1:33pm
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PrashantS - USD-JPY at 112.xx handle, and Nikkei is already at 15 handle. More to come? ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: tigershark
Date Posted: 08/Nov/2007 at 1:38pm
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japan largest exporter to usa? will we see newspaper headlines---USA LARGEST EXPORTER TO JAPAN AND CHINA? ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: BubbleVision
Date Posted: 12/Nov/2007 at 4:13pm
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Yen Carry-Trades being Ripped apart, in thin liquidity, as NY is closed! Markets are just going for the kill!
BOJ meets tomorrow. :)
Go Yen Go! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: tigershark
Date Posted: 12/Nov/2007 at 8:29pm
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yen carry trade RIP ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: PrashantS
Date Posted: 12/Nov/2007 at 10:23pm
| bubble ji u must be making good money on this ..if i am not wrong the leverage is 1 is to 10 ..so if some had gone long it is like making 50% of ur money |
Posted By: BubbleVision
Date Posted: 12/Nov/2007 at 9:05am
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PrashantS....Forex Traders are not afraid to take leverage of 100:1 also!
This USD-JPY took a lot of patience for all shorts! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 19/Nov/2007 at 9:22am
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Nikkei now sporting a 14 handle concolusively and $-Y below 110.00. Go Yen Go ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kg
Date Posted: 20/Nov/2007 at 5:34pm
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did the market crash in the later half because of this effect ? ------------- Lets rock |
Posted By: BubbleVision
Date Posted: 21/Nov/2007 at 6:31pm
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Citigroup Technical Team: USDJPY has now broken through the weekly chart Support region from 109.09 to 108.75 where the uptrend from the low in 1995 (80.00) was converged with the spike low from May '06 (109.xx) and the interim low from September '05. BubbleVision Adding: Nikkei is just above the important trendline from the 2003 Low joining May-05 Lows. It comes in at 14550 odd, and has a high probability of being tested tomorrow opening. That could produce a short term bounce. However should that break on a sustained basis, then welcome a 13+ handle. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: tigershark
Date Posted: 22/Nov/2007 at 7:32pm
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JAPAN HAS BECOM THE FIRST BEAR MKT OF 2007 DOWN 20% FROM THE TOP.CURRENCY APPRECIATION HAS TAKEN ITS TOLL WILL CHINA FOLLOW SUIT ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: BubbleVision
Date Posted: 03/Jan/2008 at 8:28am
Wow….. Nikkei closes lower by 4.0% in a 2 hour session, the first session opening for the new year. It is right on the above mentioned trendline now.
Welcome 2008 for Japan! ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 05/Jan/2008 at 9:09pm
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http://www.fullermoney.com/content/2008-01-04/nky.png - Chart of Nikkei. However, add approx 2% decline which would be seen on Monday opening. The above mentioned trendline would be broken on Opening. However, as they say, it’s the closing which is most important.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: manishdave
Date Posted: 05/Jan/2008 at 10:24pm
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Bubble,
I recently heard a new Hindi song "Carry Kiya re".
Did you write it?
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Posted By: BubbleVision
Date Posted: 14/Jan/2008 at 9:45am
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Nikkei trades with a 13 handle earlier today. Low was 13991 so far. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 17/Jan/2008 at 10:09am
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(JP) ECONOMICS MIN OTA: JAPAN NEEDS TO FIND WAYS TO INCREASE GROWTH PROSPECTS; JAPAN CAN NO LONGER CONSIDER ITSELF A TOP-TIER ECONOMY --------------WOW - That was saying from world's second biggest economy!
Wow...Wow...Wow!!!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 21/Jan/2008 at 9:56pm
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The Bank of Japan interest rate decision comes out tomorrow morning and BOJ is very very likely to downgrade their view on the economy. Interest rates are likely to stay unchanged and the voting is likely to be 10-0. The bank is likely to set up a rate cut in the next 3-4 months. BOJ = Bank of Jokers……… LOL
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 29/Feb/2008 at 9:54am
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Go $-Yen Go…… Low yesterday was 103.69. BOJ big line of Defense in the last 10-Years has been 101.28 - 100.70. Another "Faith Test" looms large.. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 05/Mar/2008 at 7:46pm
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How bad do we have it now? How do you think it compares? October 1987 Stock Market Crash; The Dow Jones falls 500+ Points, or 22%, in the steepest decline since 1929. Hedging, Portfolio Insurance, and the newly developed Automated Quantum Trading (Black Boxes) take the blame for allowing things to get quickly out of hand. Regulations are put in place to monitor Exchange Floors. Market participants are unaware of the numbers and the losses taken until after the Runners have collected, and collated the Buy/Sell Tickets. Late into the night the reality sets in of just how big the run on prices really was. Calamity Reading 90%. 1988 US Savings & Loan Crisis; Unregulated Savings and Loans are out of control after legislation controlling their use was scrapped. Over 1000 institutions fail, and a lot of finger pointing lead to the culprit; Greed. Calamity Reading 80%. 1990 Japanese Asset Bubble Bursts; Bank of Japan raises Interest Rates to cool an overheating economy, stagflation takes hold and the reaction is for the Nikkei 225 to drop over 30,000 Points, a move that lasts for over a decade, and drops 80% off the Tokyo Equity Market values. The bottom is eventually found at 7,608, in 2003. Calamity Reading 90%. September 1992 UK Exits The ERM; The UK is forced out of the Exchange Rate Mechanism following a spate of speculative attacks on the Pound. The Hedge Fund ran by Mr George Soros picks the Bank of England off to the tune of Ł10 Billion (20 Billion Dollars). Legislation is passed that will not allow somebody to ride in from nowhere and get on the correct side of a gamble that is allowed to pay out that much. The Bank of England are left to replenish their Reserves. Calamity Reading 70%. December 1994 Mexico Devalues The Peso; The Peso is devalued by a desperate Government, and the move halves the value of the currency virtually straight away. The US steps in with emergency funding, and grants loan guarantees to the tune of $50 Billion. Calamity Reading 80%. February 1995 Rouge Trader; Nick Leeson, a 28 year old trader for Baring Brothers in Singapore collects accolades for the amount of business being generated by his Arbitrage Desk. There are more than $1 Billion of Futures Contracts pegged to the Nikkei 225 that are going downhill fast, and this man single-handedly brings down the UK’s oldest investment Bank. Baring Brothers is sold for one British Pound. Calamity Reading 50%. July 1997 Asian Financial Crisis; Thailand gets things rolling by running out of enough Foreign Exchange Reserves to be able to back its currency, and as such the Baht falls to record lows. The impact in the ‘Emerging Markets’ spreads across Asia and draws in the Philippines, Thailand, South Korea and Indonesia. The International Monetary Fund steps in with emergency loans to the tune of $50 Billion. Calamity Reading 90%. October 1997 The Anniversary Crash; The Dow Jones falls 550 points, or just over 7%, in response to the Asian crisis, and the NYSE introduces new regulations to limit the damage. Wall Street closes early for the day. Calamity Reading 80%. August 1998 Russian Defaults; Yen Carry Bursts Falling Oil prices squeeze the Russian economy, a consequence of the Global recession that followed the Asian Crisis. The Russian Central Bank widens the trading range for the Ruble, and it goes on to drop by 12% in value. The Government imposes a 3 month moratorium on foreign debt payments, in other words it defaults on its loans. $-Yen carry trade busts and Yen gains rapidly sending Japanese economy in a downhill.
Calamity Reading 70%.
August 1998 US Reacts To Russian Crisis; Hedge Funds get into trouble when a flight to cash follows the Russian Debt Crisis, and a re-pricing of Risk takes place. The Bank of New York puts in place a rescue package to limit the fear of Hedge Funds failing. The Dow Jones drops 500+ points on the above news, the Asian crisis, and on the same day a misille strike by North Korea that sends three missiles over Japan. All is not well in the world. Calamity Reading 80%. April 2000 Internet Bubble Bursts; The Dow Jones tumbles over 600 points, the second largest drop on record, at the same time the Nasdaq drops 355 points, or nearly 10%. The Nasdaq goes on to lose 1000 points in the week’s trade, and ends up off 34% from the all-time high set just one month before. The Internet companies that IPO’d and ran higher give back virtually all of their values, some are reduced to absolutely nothing and are de-listed. Calamity Reading 90%. September 2001 The NYSE opens to a 684 point slide, the largest ever one day move, but a base is quickly found. The Government and the Federal Reserve step in to support the economy. A tragic event that neither loss of money, nor assets, can really compare to. This puts in perspective what loss is really all about. July 2007 US Sub-Prime Valuations Announced; In the first that many had publicly heard of it, the rating agencies Standard and Poors, and Moody’s, downgrade the LDO and CDO packages that contain the Sup-prime mortgages that were issued in the insatiable appetite that the US had to own a house. Good loans, bad loans, terrible loans, and average loans were bundled together and sold as good debt to Mutal and Hedge Funds. Once the downgrades were issued by the rating agencies the debt could not be held by many Funds, they could not sell them, and as such started to write-off their values in a move that decimated many balance sheets. The Federal Reserve wait until September to cut Rates, after waiting more than a year to cut, and then go on to shave 275 Basis Points from US Rates in quick time. The knock-on effects reduce GDP growth numbers and create a run on the US Dollar. Emergency Stimulus Packages are introduced, and the economy hunkers down for a rough ride. Calamity Reading ?%. Yen Carry busts as Mrs Wantable has no more Yen to export anymore.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 05/Mar/2008 at 8:14pm
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i really hope yen cools down and goes back to 107 or 110 ....<100 heads will roll this over leveraging is the most dangerous thing ...people never learn from their past be it 2006 in india or the recent crash. |
Posted By: omshivaya
Date Posted: 05/Mar/2008 at 11:07pm
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Excellent piece of work up there Bubble ji ------------- The most important quality for an investor is temperament,not intellect.A temperament that neither derives great pleasure from being with the crowd nor against it |
Posted By: BubbleVision
Date Posted: 07/Mar/2008 at 2:18pm
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$-Yen now with 101 handle. Last at 101.94/98. Yes, we are coming. However, wary of BOJ and Kampo.
$-Yen has not traded below 100 since Dec-1995. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 07/Mar/2008 at 3:59pm
| man this is a big worry |
Posted By: BubbleVision
Date Posted: 07/Mar/2008 at 5:32am
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http://www.federalreserve.gov/boardDocs/speeches/2002/20021121/default.htm - (from Fed 2002 Research paper) - Written by Ben Bernankie, Governor FOMC
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: manishdave
Date Posted: 07/Mar/2008 at 6:06am
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I heard they are oiling the press right now so it can run fast. They will need at least reliable press if not Fed. They don't have choice and they are going to do it. They will inflate away their debt. Tax rebate to "everybody" when u have record deficit and you are going from good economy to recession. Is it not helicopter money?
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Posted By: BubbleVision
Date Posted: 10/Mar/2008 at 5:10pm
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March 10 ( http://bloomberg.com/apps/news?pid=20601087&sid=ayQgV07dHNYI&refer=home - Bloomberg ) -- For the first time in more than a decade, foreign exchange traders are confident that the Bank of Japan won't intervene in the currency market, paving the way for the yen to extend its biggest rally since 2000. Japanese authorities sold the currency on all four occasions since 1995 when the yen approached the 100 mark in a bid to support exporters from Toyota Motor Corp. to Sony Corp. When the yen strengthened to a eight-year high of 101.43 last week, Finance Minister Fukushiro Nukaga stopped short of signaling that officials are concerned, only saying the government needs to watch currency moves “carefully.'' An attempt to influence exchange rates would bring Japan into conflict with the U.S., which relies on a weak dollar to underpin an economy on the verge of a recession. Citigroup Inc. and Royal Bank of Scotland Group Plc, the third- and fourth- biggest traders, say Nukaga will let the yen break 100 because it's 40 percent weaker than its peak in 1995 on a trade-weighted basis. ”When I intervened, the U.S. agreed to it,'' said Eisuke Sakakibara, dubbed ``Mr. Yen'' for his ability to influence the foreign exchange market as Japan's top currency official from 1997 to 1999. “The U.S. now welcomes a gradual decline in the dollar and Treasury takes the position of Detroit. This is affecting how Japan is responding now.'' Japan increasingly relies on Asia for growth, making the country less sensitive to a U.S. slowdown. Shipments to the U.S. accounted for about 20 percent of exports last year, down from about 30 percent in 2000. Asia consumes half of Japan's exports. Tables Turned Japan's economy, the world's second largest, may expand 1.5 percent this year, matching the growth rate in the U.S., the International Monetary Fund said on Jan. 29. It would be the first time Japan won't lag behind the U.S. since 1991. ”Compared to the U.S., growth in Japan is relatively robust,'' Sakakibara said. “The tables have turned.'' U.S. officials probably won't support dollar purchases unless the yen breaks 90 and heads toward 80, said Sakakibara. Central banks intervene in the foreign exchange market when they buy or sell currencies to influence exchange rates. The yen gained 0.4 percent to 102.24 at 12:51 a.m in Tokyo. Naoyuki Shinohara, currently Japan's top currency official, told reporters today he's “carefully'' watching the market, reiterating Nukaga's comments. The yen has gained 19 percent since June, the second biggest advance among the 16 major currencies behind the Swiss franc. Rather than a referendum on the economy, the rally was fueled by losses in the credit markets, which led investors to sell high-yielding assets around the world financed with cheap loans in Japan. They would need to buy yen to pay back the loans. ------------------------ On My God!!!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 10/Mar/2008 at 5:27pm
BubbleVision....
I recall that there was a talk of this issue few months ago. Some large Indian corporates have taken loan in Yen & that breakeven rate for them is some 98 or something.
So if Yen becomes stronger than 98, it might open another pandora's box.
Aaj kal jab bhagwan bad news deta hain toh chhappar phad ke deta hain!
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: nitin_jagtap
Date Posted: 10/Mar/2008 at 5:27pm
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Bubbleji .....Will it be a war of the central banks at the 100 level ? ------------- Warm REgards Nitin Jagtap |
Posted By: BubbleVision
Date Posted: 10/Mar/2008 at 5:33pm
Don’t Hope so!!! I would like a one off large single swoop!
BTW, Central banks dont "War". The "have joint intervention". However, the US Treasury has NOT interviened in FX since 1995 and Dollar is the Job of US Treasury and NOT the Fed. BOJ last interviened in 2004, and ECB interviened in 2000.
The 1995 $-Y was the largest intervention and the most impactful, when BOJ and Fed sold Yen and purchased USD. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 10/Mar/2008 at 5:41pm
Kulman…There is “stop loss and knockout city” below 100. There are all kinds of option structures globally. This is at least 5 times bigger than that USD-CHF level of 1.1000.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 10/Mar/2008 at 5:45pm
Hmmm....so another black swan?
Can you please however elaborate on “stop loss and knockout city” in few lines & laymen lingo?
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 10/Mar/2008 at 5:51pm
Knockout levels are levels which when traded results in the option being redundant. This means that the hedgeing goes kaput.
Here is a good Link from http://www.riskglossary.com/link/barrier_option.htm - Risk Glossary ( http://www.riskglossary.com/link/barrier_option.htm - http://www.riskglossary.com/link/barrier_option.htm ) for more info. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 12/Mar/2008 at 2:01pm
|
(JP) EX-MOF'S SAKAKIBARA ("MR YEN"): SUBPRIME TURMOIL NOT HAPPENING IN JAPAN; MARKETS ASSUME USD TO FALL BELOW Ą100 - Expects USD to break Ą100 in 2-3 weeks - Does not expect intervention over USD/JPY at Ą90 - Japan can compete with USD at Ą90 - USD/JPY fair value 90-100 - Expects the CNY and JPY to rise 10%-20% in 2008. - Could see Euro at Ą130-Ą140  ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 12/Mar/2008 at 9:30am
|
yen closing inn can it be possible that we see another selloff |
Posted By: Mr. V
Date Posted: 12/Mar/2008 at 9:36am
|
Bubble,
What's the ballpark estimate of the 'knockout city' that we are looking at with Yen < 100 ? |
Posted By: BubbleVision
Date Posted: 13/Mar/2008 at 4:45pm
|
$-Yen traded Sub 100 Today. Dealers are happy that the stops are done and everyone is happy!!!
 Now wait for Nikkei with a 11K Handle tomorrow morning.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: kulman
Date Posted: 13/Mar/2008 at 4:58pm
|
BubbleVision....
TLSJ reported http://www.theequitydesk.com/forum/forum_posts.asp?TID=1297&PID=65632#65632 - this news before you.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: catcall
Date Posted: 13/Mar/2008 at 7:13pm
|
Bubble, if the Yen breaks 98, what is the next support? ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: Janak.merchant1
Date Posted: 13/Mar/2008 at 8:29pm
Hi,
Can anybody help-guide me-send me reliable link for currency rates?
Thanks in advance.
Best wishes ------------- I love my money, not my opinion. So i am ready and willing to change my opinion for the sake of protecting my money. |
Posted By: BubbleVision
Date Posted: 13/Mar/2008 at 8:57pm
Catcall, its a 13-Year low for $-Y and I dont have any Supports. However, the next major level is 79.76, the all time low. (I know someone in Chennai who purchased at that rate 14-Years ago). ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: equity analyst
Date Posted: 13/Mar/2008 at 9:08pm
|
Mr janak u can check live currency rates at www.netdania.com
------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: equity analyst
Date Posted: 13/Mar/2008 at 9:10pm
well bubble i heard that Barclays dubai is forecasting 80 for yen$ , is it possible. 
------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: BubbleVision
Date Posted: 13/Mar/2008 at 9:15pm
The 3-Year $-Y forward is already trading at that level!!!
 ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: equity analyst
Date Posted: 13/Mar/2008 at 9:17pm
|
thanks for the information bubble.
------------- "Markets are the places where two types of people meet up in the morning: those with experience and those with money. Towards the end of the day, they exchange their assets and go home." |
Posted By: kaushalchawla
Date Posted: 13/Mar/2008 at 11:09pm
|
All, Can there be huge losses to indian companies because of $-Yen equation? Nobody expected the Yen appreciating so fast? and Re holding on for a while?
(This question is from hedging perspective....do indian companies use yen for hedging?) ------------- Warm Regards, Kaushal |
Posted By: kulman
Date Posted: 13/Mar/2008 at 11:18pm
Another Black Swan event like Swiss Franc. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: BubbleVision
Date Posted: 14/Mar/2008 at 12:42pm
|
XXX/JPY being hammerred! Carry meltdown starting? EUR-JPY should see 140!
EUR-JPY last at 155.00!
$-Y with a 98 handle currently. See Nikkei with a 11K handle monday morning!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rudra
Date Posted: 14/Mar/2008 at 12:53pm
| Dear Bubble is there any free source to get live data for crude oil futures of nymex/comex?Any help?Sorry for offtopic but I thought not to open a new post for this. |
Posted By: BubbleVision
Date Posted: 14/Mar/2008 at 12:57pm
Visit http://www.nymex.com - www.nymex.com . They give 15 minutes delayed data. I would post another source tomorrow in the Crude oil thread. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rudra
Date Posted: 14/Mar/2008 at 5:51am
Thx that link I already have and using it now waiting for your 2nd link,much oblidged dear Bubble.
|
Posted By: BubbleVision
Date Posted: 16/Mar/2008 at 6:22am
|
Nikkei trading with 11K Handle!!! Excellent !
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 16/Mar/2008 at 7:08am
|
Nikkei Sinking!!! Now down Aussie stocks led by banks sinking. Macquarie down 8%.
Kospi sinking as well. Led by as usual finantials!!!
XXX/JPY Sinking! Carry is starting to unwind!!!
Excellent!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 16/Mar/2008 at 7:18am
|
CNBS (ok CNBC) flashing "Asian stocks slip on Fed rate cut". How come they get the logic of "Stocks down on a rate cut" and NOT "Stocks gain on rate cut expectations". Should they have flashed "Stocks sink dispite rate cut"?
Atleast CNBS (ok CNBC) changes quickly!!!
ROFL!!!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 16/Mar/2008 at 7:35am
|
Excellent article calling for what is highly likely imo. Carry meltdown!!! Expect a lower EUR-USD if USD-JPY stays at the current rate or lower USD-JPY if EUR-USD stays the same. Basically EUR melting against JPY. This phenomena is very very negative equity globally!!!
Fwiw....EUR is example for all anti dollars like CHF/GBP/AUD/NZD etc....so the meltdown could be on xxx/JPY.
Please do your own research before doing anything and dont blame anyone. The author nor the poster takes any responsibility on possiable profits/losses. Read the poster's disclaimer.
-----------------------------
"Crash and Carry" March 17th 2008
Lena Komileva, head of G-7 market economics at Tullett Prebon, predicts a sharp reversal of the global carry trade. The most startling aspect of the USD's decline over the past year has been its occurrence against a backdrop of fairly limited re-pricing of risk across other G-10 currencies, and extreme correction in risk premiums in other financial asset classes. Swap spreads indicate that the subprime-driven credit crunch is a global phenomenon - the longer it lasts, the greater the impact will be on global asset valuations, including previously sheltered markets such as Asia and the emerging markets. Yet, in the early days of this credit crunch, one of the most popular FX carry pairs, AUD/JPY, did not peak until the last week of July 2007, despite deteriorating investor risk sentiment dating back to the beginning of the month. These early warning signals included increased contagion from US subprime across all mortgage securities, including AA and AAA tranches, and wider European asset swap spreads, as a sign of cross-border financial stress. This month, liquidity tensions in core term-funding markets forced the Fed to intervene twice with liquidity-providing measures and to co-ordinate actions with other G-10 central banks, as it did in December, to avoid a Northern Rock-type problem in the US. Signs of stress were visible well outside US markets as a reflection of the hole in banks' balance sheets left by paralysed sub-investment securitisation markets: spreads between term-deposit rates and overnight index swaps in the euro and sterling markets widened to the highest levels since the year-end liquidity crunch levels in December; Japanese asset swaps saw their sharpest widening on record; and German Bund option volatilities spiked to new highs. Yet EUR/JPY has held above 155, well clear of the low of 149.3 reached last August. Indeed, despite elevated and shock-prone equity risk premiums, bond yield differentials retain the strongest explanatory power for any major currency, particularly for the US dollar. With the US yield curve steepening on expectations of more aggressive Fed easing, US yield pessimism and wider spreads between carry and funding currencies continue to unite investors. The market has moved to favour yen calls and euro puts in recent weeks and is prepared to pay almost double the volatility premium to hold long yen positions against the Australian dollar. But valuations have stayed short of levels at earlier periods of peak stress, in January or last August, despite signs of fatigue in 'euro bull' FX sentiment gauges. The de-coupling between FX and other financial asset classes is particularly striking considering the driving factors behind bond yield differentials. At the start of this year, Tullett Prebon's US Leading Indicator gave a strong signal of an imminent recession in the US, at 85%, compared with a market consensus of 45%. This, along with expectations of aggressive Fed easing, has since been fully priced and overpriced in financial valuations. From here on, the case for independent dollar weakness requires evidence that the US economic weakness is an isolated event. This does not appear to be the case. Official growth projections for other industrialised economies are still being revised down, as communications this month from the ECB, the OECD and the UK Treasury indicated, tracking the market and the economist consensus cycle. With no end to financial credit problems or the US-led G-10 slowdown in sight, concerns about the resilience of export-dependent emerging markets have joined the global re-pricing of fundamental risks. Expectations about medium-term growth fundamentals back the argument against isolated dollar weakness. Index-linked bonds are showing lower, but still resilient, growth expectations for Japan by the standards of the past decade. In contrast, projections for medium-term European GDP have fallen by more than a percentage point over the past nine months, tracking projections for UK and US growth. The market's rationale on relative domestic demand fundamentals is supported by developments in financial risk premiums. The dislocation across money markets, as a proxy for the magnitude of a negative money supply shock from financial volatility onto the real economy, is greatest in the US dollar market, but it is also much wider in the euro market than in the yen market. Overall, the de-coupling between the FX and other markets implies a high risk of a quick and sharp capitulation of the global carry trade. To the extent prolonged dollar weakness has been the main axis for the current status quo in G-10 and emerging market carry, there appears to be a vast pent-up potential for a broader re-pricing of risk. In the absence of a top-down, yet market-based, structural solution to the credit crunch, we do not expect the Fed to be in a position to declare the bottom of this rate cycle in 2008. The origins of both the financial crisis and the US slowdown are more structural than cyclical, so a cyclical recovery is some way off. Instead, a broader shake-up of market risk is likely to arrive from the realisation that the aggressive US policy stimulus is a reflection of the unique group of cyclical and structural risks facing the US economy and global financial markets rather than an antidote to these risks for the rest of the world. This is consistent with faster 're-coupling' between G-10 growth and policy rates versus the US over the next two years and slower liquidity growth in emerging markets, including and possibly led by China. The bulk of de-leveraging in the FX market has yet to come."
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 16/Mar/2008 at 8:56am
|
Yen is gaining quite fast |
Posted By: BubbleVision
Date Posted: 18/Mar/2008 at 9:48am
|
FOREX: THE TIMES LOOKS AT THE YEN CARRY TRADE; EXAMINES THE IMPLICATIONS OF THE CARRY TRADE ON ASIAN INVESTORS - The article does not give any new insight into carry trades, but notes that the equity market volatility and USD/JPY decline could set off a $300B "time bomb" in the global yen carry trade, citing dealers. - The article also notes that Tokyo-based economists are speculating that a severe crash in the carry trade could trigger a more devastating disrupton in the $1T overseas investment of Japanese mutual funds. - An fx analyst for Barclays notes that Asian corporates are holding a series of deeper yen-carry positions in the form of long-dated options, which amount to $300B and these instruments are more sensitive to forward exchange rates than spot prices. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: PrashantS
Date Posted: 18/Mar/2008 at 11:39am
| is there a problem with Japanese sub prime thing also i heard it is a big mess |
Posted By: BubbleVision
Date Posted: 03/Apr/2008 at 11:38am
|
(JP) FORMER CURRENCY OFFICIAL SAKAKIBARA (MR YEN): JAPAN WILL NOT INTERVENE IN FOREX AT CURRENT YEN LEVELS - Difficult for ECB to act to weaken Euro - USD/JPY may decline below 90 by mid-year - Japanese economy may grow less than 1.0% in 2008 - Strong Yen cheapens imports - G-7 will maintain basic currency stance next week - FX market does not warrant joint intervention - Expects G-7 to say that excess currency moves are unwanted ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 07/Apr/2008 at 6:25pm
|
It's very difficult to asses the exact extent of yen carry trade.
The figure may be much higher than estimated.
It's not only Banks/Funds/Corporates/Professionals, who are into yen carry trade
but
ordinary persons(Who, otherwise are not in financial markets) are also dragged in. A freind of mine in Germany, bought a house two years ago and it was financed through yen carry. I believe,many housewifes all over world (Imagine including East Europe) are knowingly or unknowlingly involved in it.
I, personally believe that the unwinding that we have seen so far is by short/medium term players.
Long term players are, perhaps still sitting tight. They have tremendous cost advantage of 350-400 pips per year and the game is going on for so long. When these long term players exit or their stops are hit(Which may be very far off from these levels) then Yen may run 400-500 pips daily for a very big move, as happened some 12-13 years ago.
This is once in a decade/Two decades sort of affair and till it happens, the game may continue.
Risk appetite in financial world is too big. ------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 07/Apr/2008 at 6:36pm
Japan will never admit before intervention.
Their export lobby is very strong.
All of a sudden BOJ will intervene and declare only when the process is over.
They have done it many times in the past.
Last few years they have not done it because JPY was range bound or on weaker side.
Now they can do it any moment
and definately, they will not announce it before doing so. ------------- Fund Management is Most Important |
Posted By: BubbleVision
Date Posted: 07/Apr/2008 at 8:01pm
Fwiw....Its NOT Yen carry in Europe. Its the CHF carry in play there. All Eastern Europe (Hungary, Poland, Romania etc etc) Housing markets are financed from CHF loans.
Where is the cost advantage for Long term players when YEN has appreciated by approx 25% (2500 pips) in the last 8 months.
The Carry-to-Risk profile of a carry trade had shot up very high in Jan-Feb period, which means that all trades have capitulated.
*Carrry-to-risk = Difference between Libors of YEN and USD (or any two currencies) devided by Annualized volatility of the pair. (USD-JPY in this case).
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 07/Apr/2008 at 8:13pm
A repost would be apropriatre here ...There has been no more FOREX intervention ever by the G7 so far....
Look for BOJ..
Source: Reuters, May 15, 2003
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 07/Apr/2008 at 8:24pm
|
In last 8-12 months Yen futures have moved from approx 8200 to 9800 today.
A move of 1600 pips.
Rest of the pips, is cost advantage for carry holder. Means his total loss for one year is 1600 pips. (Total advantage in a decade is close to 4000 pips)
And this level of 9800 came 1-2 years ago also when long term players were not cut.
I think, any one who sold yen a decade ago has a shelter upto approx 12000 in yen futures (Spot USD-JPY around 80-85 level)
To me, Capitulation looks, bit further down the road.
Having said this
Bubble Ji, I am no way in favour of carry trade. Am deadly against it
------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 07/Apr/2008 at 8:40pm
|
Bubble Ji
Re: Repost
I agree that there's no intervention during last few years, perhaps because of range/weaker yen and same thing I have mentioned in my original post also.
But, there's no guarantee that it will not happen in future. Come capitulation and BOJ follows. ------------- Fund Management is Most Important |
Posted By: BubbleVision
Date Posted: 07/Apr/2008 at 9:08pm
Oh....You are talking about YEN Futures and I am talking about $-Y. Hence the difference in Pips.
The 9800 level corresponding to a low of 100 in $-Y which was seen in 2004. That was subsequently broken a few weeks back. I am yet to see who has carried a currency trade for more than 10 year.
The trades taken near 1995 low in $-Y (80) must have been cut before the rout in 1998 (144). The trades entered in 1998 (100) lows would have been cut near the 2002 (135) highs and the trades entered along with BOJ lows in 2004 (100) would have got cut in late 2007 (120-118), provided one managed to trade all the bigger swings.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 08/Apr/2008 at 7:40pm
|
[/QUOTE]
Fwiw....Its NOT Yen carry in Europe. Its the CHF carry in play there.
BUBBLE JI
KINDLY CORRECT ME IF MY INTERPRETATION OF CARRY TRADE IS WRONG
I think CHF came on carry trade picture at a very late stage than YEN because of interest rate differentials and the quantam of YEN carry is much larger than CHF carry.
During the last ten years (From Jan 1998 till today) following is the extream movement of respective pairs:
EURJPY
Low : 88.87 (During Dec 2000 Qtr)
High : 168.63 (During Sept 2007 Qtr)
Low to High : 90%
EURCHF
Low : 1.4382 (During Sept 2001 Qtr)
High : 1.6827 (During Dec 2007 Qtr)
Low to High : 17%
SOURCE : "REUTERS TRADER FOR COMMODITIES ADVANCED" WHICH IS A SUBSCRIBED SERVICE.
Whereas EURCHF have moved 17% from low to high during last decade, EURJPY has moved 90% during the same period.
This clearly implies that much more carry trades have taken place in EURJPY than in EURCHF
Please enlighten me with your views.
Thanks!
------------- Fund Management is Most Important |
Posted By: BubbleVision
Date Posted: 08/Apr/2008 at 8:27pm
I Absolutely agree that there is far more Yen-Carry than CHF carry globally. There is no debate even.
However when we talk about Eastern Europe specifically, it depends on EUR-CHF for carry-trades, as CZK, PLN, HUF are eventually to be merged into EUR by 2011. If you know guys in eastern europe, you can confirm for yourself from banks there.
BTW, there is huge carry in AUD-JPY. Dont we hear about daily Toshins and Udarashi's due to which Yen is weak. FYI...A large Toshin issue went through y'day in AUD-JPY, due to which the cross was bid up by >1%, despite the v negative AUD data.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 08/Apr/2008 at 8:37pm
|
Thks prmt rply.
AUD-JPY is obvious cause yield diff
Any idea abt KIWI-JPY carry. To what extent ------------- Fund Management is Most Important |
Posted By: BubbleVision
Date Posted: 08/Apr/2008 at 8:51pm
Kiwi has a Yield of 8.25% while YEN has 0.50%. Clearly big carry.
One of Kiwi's business confidence survey (NZIER) came at a 33-Year LOW today, classic signs of hard landing.
The RBNZ is very likely to cut in the middle of the year by 75 bps in 2 instalments. So, a crash is awaiting Kiwi-Yen. The best buying opportunity is likely to come in AUD-NZD cross for conservatives and Shorting on NZD-JPY for agressers.
RBNZ would be very happy by a fall in Kiwi, as that is exactly what they want. Rembember last year, when they sold Kiwi in intervention.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: Mohan
Date Posted: 09/Apr/2008 at 7:04pm
|
Bubble, Is the KIWI having the highest yield differential to the JPY ? ------------- Be fearful when others are greedy and be greedy when others are fearful. |
Posted By: BubbleVision
Date Posted: 09/Apr/2008 at 7:44pm
Yes, in front line currencies.
Other than that, ISK (15%) and TRY (18% i think) have very high yields. However, with these there is a chance of a capital loss, incase these countries default. ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 09/Apr/2008 at 4:03am
|
BOJ deputy Gov Watanabe has said that:
Intervention to smooth volatile forex moves can be justified.
Who knows? They might have intervened already. JPY spot has moved from a high of 95.71 recently to 101.71 today ------------- Fund Management is Most Important |
Posted By: PrashantS
Date Posted: 10/Apr/2008 at 4:15pm
| can it appreciate a lot more this time say 90? |
Posted By: BubbleVision
Date Posted: 10/Apr/2008 at 6:21pm
Fwiw...ISK rates are now at 15.50%. The certral bank there raised rates by 0.50% today (again) at an unscheduled meeting for the second time intra-month, to try and save the currency.
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 10/Apr/2008 at 7:20pm
ZAR (South African Rand) boyz are following ISK kids!
*(SA) SOUTH AFRICA RAISES INTEREST RATES BY 50BPS TO 11.50%, NOT EXPECTED
- Central bank was expected to hold interest rates steady at 11.00% - Central Banker Mboweni says there are signs that household spending is responding to tighter monetary policy; Expects global FX rates to stay volatile - Says scenario is 'bad' if there is a large price increase in electricity ------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: BubbleVision
Date Posted: 10/Apr/2008 at 7:40pm
South African Central Bank Governor Mboweni says after hiking rates........"Things are very, very bad and we must pray" !
LOL!!!
Rembember that South Africa is a commodity producer and they are saying these things...HAHAHA!!!
Just pray!!!
------------- You can't make money if you are unwilling to lose...It's like willing to breathe in but not willing to breathe out. -- ED SEYKOTA ....Read Disclaimer! |
Posted By: rakeshmehta48
Date Posted: 10/Apr/2008 at 5:17am
Quite possible.
Next time, whenever it breaks 95 level, the move after that may be very rapid and it can easily cross 90.
One has to keep an eye on S&P. If it closes below 1339 for three consecutive days, then yen move is very much on the cards. ------------- Fund Management is Most Important |
Posted By: rakeshmehta48
Date Posted: 25/Jan/2009 at 7:11pm
|
JPY has achieved it's target of below 90 and seems to have stablized in 85-90 range, but now it's hurting Japanees economy a lot.
Chances of BOJ intervention are high now, specially since most of the carry trades must have been unwounded by now and resistance may not be that much.
JPY may race towards 100 level (Means Yen weakening)
Any expert opinion. ------------- Fund Management is Most Important |
Posted By: kulman
Date Posted: 25/Jan/2009 at 8:16am
http://www.bloomberg.com/apps/news?pid=20601109&sid=aGeeh4B_CLSE&refer=exclusive - Japanese Housewives Desperate After Currency Scheme Collapses Baap re! When it's too good to be true, it probably is. While trying to earn from the carry trade spread Housewives are now worried about daily bread! ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: rakeshmehta48
Date Posted: 09/Feb/2009 at 8:32pm
JPY has since weekened to 92 level.
Chances of 100 level are bright, specially if US stock markets stabalize a bit.
------------- Fund Management is Most Important |