Does no one care that these types of trades are destroying the economies?
I don't have an accurate answer, but from what I've seen with oil prices, and housing, I'm going to say no. I don't understand the effects of the carry on the Japanese economy, I do know for sure that a lower yen means cheaper exports for them, and a better trade balance, so it may just be beneficial to them. Yet that's speculative on my part...so I don't truly know.
- #11,525
- Sep 2, 2008 1:38am Sep 2, 2008 1:38am
Yes, it's true and you answer is accurate. Capital flow is always bad for the trade balance ( As an export oriented country the weak yen is a MUST for the Japanese business ). The higher interest rate -> higher demand for the currency with the better interest rate -> higher currency value -> higher terms of trade -> lower trade balance. We can't say it is bad for an economy to have higher currency value, it is bad for the trade balance for sure and unemployment will surely rise as, so we can say it is bad for the normal working person, but for an economist it is all the same, because the markets have found another equilibrium
- #11,526
- Sep 2, 2008 1:38am Sep 2, 2008 1:38am
Yes, it's true and you answer is accurate. Capital flow is always bad for the trade balance ( As an export oriented country the weak yen is a MUST for the Japanese business ). The higher interest rate -> higher demand for the currency with the better interest rate -> higher currency value -> higher terms of trade -> lower trade balance. We can't say it is bad for an economy to have higher currency value, it is bad for the trade balance for sure and unemployment will surely rise as, so we can say it is bad for the normal working person, but for an economist it is all the same, because the markets have found another equilibrium
- #11,528
- Sep 2, 2008 2:39am Sep 2, 2008 2:39am
- | Commercial User | Joined Mar 2008 | 9,069 Posts
There is an sudden surge in Eur/JPY!! 
