The currency carry trade has gained significant attention as the unwinding of yen carry trades accelerated the Japanese yen’s rapid appreciation against the US dollar in early August 2024. This development has placed carry trades at the center of macrofinancial stability discussions. This analytical note provides an overview of currency carry trades, examines indicators that reveal the scale of such activities, analyzes the exposure of ASEAN+3 economies, and considers the associated risks and possible policy responses.
Analytical Notes