Wednesday, August 22, 2007

The impact of those retail investors repatriating their funds is likely to be much larger than that which has been seen so far.

Forex volatility threatens carry trade

Mr Sasaki estimates Y7,000bn ($61bn, €45bn £31bn) in yen short positions through margin trading, day traders bought back yen to the tune of Y3,800bn in just one week. big question is what the large number of Japanese investors who have bought investment trusts or uridashi bonds denominated in dollars high-yield currencies will do.these investors, who have generally invested surplus funds, have stood firm.US interest rates start to fall sharply and the dollar plunges as some believe will happen even those investors could choose to redeem.The impact of those retail investors repatriating their funds is likely to be much larger than that which has been seen so far.As one banker says:Japan is the provider of the world’s liquidity So the unwinding of that will have a big impact.

Posted by chris :-)) @ 12:49 AM (494 views)
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