Definition ∞ The Yen carry trade is a foreign exchange strategy where an investor borrows Japanese Yen at a low interest rate. The borrowed Yen is then converted to another currency to invest in higher-yielding assets elsewhere. The profit arises primarily from the interest rate differential between the two currencies. This strategy seeks to capitalize on global interest rate disparities.
Context ∞ The Bank of Japan’s continued accommodative monetary policy keeps Yen interest rates low, making the Yen carry trade a persistent feature of global financial markets. Any adjustments to this policy are closely watched for potential implications for capital flows into risk assets, including cryptocurrencies. This trade often influences global liquidity conditions.
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