The Japanese Carry Trade: What Is It and What It's Unwinding Could Mean for Markets?

The Japanese Yen carry trade is an investment strategy where investors borrow money in Japanese yen (JPY) at a low interest rate and invest in higher-yielding assets or currencies elsewhere to profit from the interest rate differential. This has been a popular strategy due to the Bank of Japan's (BOJ) long-standing policy of ultra-low or negative interest rates.