Yen Gains on the FX Market as Carry Trade Unwinds

October 6, 2008 by Trader Rich

Is the carry trade “dead” in currency trading?The yen is gaining in currency trading on the FX market as investors consider that the carry trade might be "dead" — at least for now. For the month of September, the yen was the only currency to make headway overall against the U.S. dollar in forex trading. Additionally, the current climate of risk aversion is making the volatile carry trade less desirable.

Things are changing as uncertainty in the European and American markets, especially surrounding financial institutions, is making things dicey. This is leading to a change in the forex traders do things for now. Bloomberg reports on the financial markets and the place the yen has in currency trading:

“We are in a multi-year trend reversal,” said Paresh Upadhyaya, a senior vice president at Putnam Investment LLC in Boston who helps manage billion in currency assets. “We are going to see a global central bank easing cycle. The yen is the place to be in this environment of economic slowdown and heightened volatility.”