Yen Carry Trade Is a ‘Ticking Time Bomb,’ Warns BCA Research

Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the worldAmericas+1 212 318 2000EMEA+44 20 7330 7500Asia Pacific+65 6212 1000The rate of the yen against various currencies displayed outside a securities firm in Tokyo on Feb. 9.The carry trade in the yen is “a ticking time bomb,” with the popular hedge-fund strategy vulnerable to a massive unwind, according to BCA Research analysts.The trade — broadly defined as borrowing in the low-yielding Japanese currency to fund purchases of higher-yielding assets — benefits from the greater “carry” on these foreign investments. But the trade unravels if the riskier assets tumble or the yen rallies.