https://risksandreturns.com/category/currency/ In search of asymmetric trading opportunities… en-US https://risksandreturns.com/2007/03/09/japanese-individuals-getting-in-on-the-yen-carry-trade/ https://risksandreturns.com/2007/03/09/japanese-individuals-getting-in-on-the-yen-carry-trade/ Fri, 09 Mar 2007 21:23:14 +0000 The WSJ reports that Japanese individuals are engaging in the yen carry trade, too. https://risksandreturns.com/2007/03/08/the-us-trade-deficit-as-a-source-of-global-liquidity/ https://risksandreturns.com/2007/03/08/the-us-trade-deficit-as-a-source-of-global-liquidity/ Thu, 08 Mar 2007 21:16:40 +0000 I have discussed before the importance of the yen carry trade for pumping liquidity into financial markets worldwide. But the US trade deficit may be a far greater source of easy money. The entire yen carry trade is widely estimated to be worth $200 billion. Compare this to the US trade deficit which is running at $800 billion per year. https://risksandreturns.com/2007/02/14/buying-the-yen-etf/ https://risksandreturns.com/2007/02/14/buying-the-yen-etf/ Wed, 14 Feb 2007 21:03:57 +0000 In my previous post I mentioned that I was sitting on 20% cash. Today I decided to use almost all of that cash to buy the CurrencyShares Japanese Yen Trust (NYSE:FXY) for $82.75 per share. In effect, I am still in cash — albeit yen rather that dollars. https://risksandreturns.com/2007/02/01/yen-carry-trade-could-end-in-2007/ https://risksandreturns.com/2007/02/01/yen-carry-trade-could-end-in-2007/ Thu, 01 Feb 2007 21:12:35 +0000 The yen carry trade has been a major source of global liquidity since 2001 when Japan’s central bank cut rates to nearly zero while managing the US dollar-yen exchange rate. It’s intention was to stimulate Japan’s consumer spending and exports. https://risksandreturns.com/2007/01/26/should-china-be-worried-about-inflation/ https://risksandreturns.com/2007/01/26/should-china-be-worried-about-inflation/ Fri, 26 Jan 2007 10:23:09 +0000 During 2006 China’s GDP grew by 10.7% vs. 10.4% in 2005. As I have discussed previously, China will continue to experience hyper-growth as long as US consumer spending does not falter. However, this looks like a low probability scenario given that the US housing market, which played a large part in boosting consumer spending during the last 5 years, is clearly in a recession. https://risksandreturns.com/2006/12/13/yuan-appreciation-accelerating/ https://risksandreturns.com/2006/12/13/yuan-appreciation-accelerating/ Wed, 13 Dec 2006 10:28:23 +0000 Since September when I speculated that a yuan revaluation was imminent, China’s currency has appreciated by 1% or at an annual rate of 4% against the US dollar. However, the current rate of 7.82 yuan/dollar is still too high and has done nothing to reduce the China-US trade balance. https://risksandreturns.com/2006/12/10/gulf-countries-and-their-surging-u-s-dollar-assets/ https://risksandreturns.com/2006/12/10/gulf-countries-and-their-surging-u-s-dollar-assets/ Sun, 10 Dec 2006 20:25:20 +0000 When we think of countries that are hoarding US dollar assets the first country that pops to mind is China. But the increase in oil revenues in recent years has made the Gulf countries perhaps just as important in this regard. According to the Economist: