A blistering rally in the Japanese yen ahead of an expected interest rate hike from the Bank of Japan next week is upending the long-established and lucrative carry trade, as investors rethink the path ahead for the volatile currency.
Early hints of capital repatriation and expectations of a faster pace of monetary tightening by the BOJ along with U.S. pressure are combining to boost the yen, which hit 40-year lows in July, triggering a joint U.S.-Japan intervention.
