Thank you yen carry trade unwind

[c1ue]

I just lost 3%+ on a yen transaction for an im/ex deal due to the yen dropping from 122+ to 118.6 in 4 days.:mad:

Not the full yen carry unwind, but definitely a tranch or two.

[Jim Nickerson]

I just lost 3%+ on a yen transaction for an im/ex deal due to the yen dropping from 122+ to 118.6 in 4 days.:mad:

Not the full yen carry unwind, but definitely a tranch or two.

c1ue,

If you see this and care to take the time, will you please explain what you wrote above? What is "im/ex deal"? And didn't the yen actually increase from 122 to 118.6?

[c1ue]

Jim,

As I've mentioned before, I'm moving part of my moola out of the US.

Moving cash is always a bad idea - especially with the nasty IRS regulations around foreign investments.

However, there is nothing to stop me from opening a corporation abroad. It is like buying a car in France - the IRS can say nothing about my doing so as long as I am not a titled owner. That's what (VERY very) trusted relatives are for.

Anyway, one of the companies is doing import/export from Japan into Russia. While the dollar has been a staple of the Russian economy since 1996, recently this has changed due to the $ depreciation. Everything is now y.e. (euro).

However, this particular transaction was still dollar based. Thus the yen delta from 122+ to 118 hurt me because my payment was fixed in dollars, but my cost (and I just wired the payment to the supplier) was in yen.

Fortunately my business is based on a 105 yen ratio, but I'm still ticked off by not getting what I had pretty much booked.:mad:

As for the yen carry trade unwind comment: as I've noted above, I believe a more realistic yen/dollar ratio is in the 105-110 range.

I do not believe myself nor have I been told by those who do this type of work, that the yen carry trade unwind will be all at once.

However, the expected behavior when there is a yen carry trade unwind is exactly what we've been seeing: a dramatic change (increase) in yen value vs. dollar in a short period of time. 3%+ delta in 1 week is very dramatic, but as noted I would expect there to be several stages.

In February 2007 we saw a 121 to 116 change, but as recently as 2005, the yen was under 105.

[Jim Nickerson]

Jim,

As I've mentioned before, I'm moving part of my moola out of the US.

Moving cash is always a bad idea - especially with the nasty IRS regulations around foreign investments.

However, there is nothing to stop me from opening a corporation abroad. It is like buying a car in France - the IRS can say nothing about my doing so as long as I am not a titled owner. That's what (VERY very) trusted relatives are for.

Anyway, one of the companies is doing import/export from Japan into Russia. While the dollar has been a staple of the Russian economy since 1996, recently this has changed due to the $ depreciation. Everything is now y.e. (euro).

However, this particular transaction was still dollar based. Thus the yen delta from 122+ to 118 hurt me because my payment was fixed in dollars, but my cost (and I just wired the payment to the supplier) was in yen.

Fortunately my business is based on a 105 yen ratio, but I'm still ticked off by not getting what I had pretty much booked.:mad:

As for the yen carry trade unwind comment: as I've noted above, I believe a more realistic yen/dollar ratio is in the 105-110 range.

I do not believe myself nor have I been told by those who do this type of work, that the yen carry trade unwind will be all at once.

However, the expected behavior when there is a yen carry trade unwind is exactly what we've been seeing: a dramatic change (increase) in yen value vs. dollar in a short period of time. 3%+ delta in 1 week is very dramatic, but as noted I would expect there to be several stages.

In February 2007 we saw a 121 to 116 change, but as recently as 2005, the yen was under 105.

Thanks, c1ue. It would surprise me if anyone understood what you initially posted, but perhaps I was the only one who didn't get it.

Now I get it. I am glad you have others you can trust with your money, that has to be rare.

[spunky]

I just lost 3%+ on a yen transaction for an im/ex deal due to the yen dropping from 122+ to 118.6 in 4 days.:mad:

Not the full yen carry unwind, but definitely a tranch or two.


It wont, and the BOJ is on hold with its political term oil, so dont expect any rate hike soon.


I was online this am , and missed the pop, due to friggin brain freeze :( 10pm at 119.25, now


There are companies who offer money markets with foreign currency exposure

[c1ue]

The problem with yen accounts is you usually also get the yen interest rate: 0.25%

Given that money market accts in Russia and other places are 10%+ and I have zero confidence in predicting the yen carry unwind timing, my choice is to take the interest.

[spunky]

he he he


Made some good cash today on the yen. sweet :D Cant wait for Bernake to get stupid. Can you say " short the dollar " . I will look to the swissy here soon


Peace out :cool:

[c1ue]

Did you wait for 112.9 before pulling the trigger?

Probably a short term high for the yen - soooo close to true capitulation today.

[spunky]

I am puzzled :confused: the cheesy durable goods number / one tick up in new home sales , and a pop in the buck, but not much movement in the USD/CAD ???? Missed some upside in the euro yesterday, but hey who could anticipate all that sweet little move :D


Good luck on your trades Clue