![](https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgxVgQFWnlaLd5BjG5J2_py_mT7q0-6JJbSkLnkDtYN43B1hpt6DgmF0apNLiaY4OjuAVE6Y0PppyA8HQHafzt8RRy3BxUh3cBQK5auumWXujmdDRduURxeSuyndQ86RnWyze6Z2-MsYKo/s400/fxy.png)
Update: John Campbell, the smartest finance economist I know, offers me this explanation:
Why the striking pattern in the last year? I think it's because during the liquidity crisis, the stock market has fallen at times when hedge funds and investment banks are deleveraging -- at such times, they cover the carry trade, that is, they buy yen and sell high-interest currencies such as the Australian dollar.
That story is consistent with the increasing risk of the carry trade.
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