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Korea Investment & Securities: No Immediate Risk of Massive Yen Carry Trade Unwinding
Finance · Investment Banks/Brokers · yonhap_finance · 2026-09-07
Despite the recent strengthening of the yen, analysts at Korea Investment & Securities argue that a rapid unwinding of carry trades is unlikely for now.
What Happened
Yen Volatility Assessment: Korea Investment & Securities noted that the dollar-yen exchange rate recently dropped from the 156 to 154 range, signaling a shift toward a stronger yen. This movement has sparked concerns regarding the potential unwinding of yen carry trades, especially following a decline in Japan's foreign exchange reserves.
Unwinding Potential: Researcher Moon Da-woon stated that while the incentives for unwinding carry trades have increased, a sudden, massive exodus of capital is not yet imminent. Such a rapid liquidation would likely require a significant risk event to trigger widespread market panic and risk aversion.
Exchange Rate Outlook: The current appreciation of the yen is viewed as a partial correction of previous market imbalances. The firm projects a gradual decline in the dollar-yen rate, targeting the 150 level by the end of the year.
Risk Factors: However, the firm cautioned that unexpected outcomes from upcoming Bank of Japan or Federal Reserve policy meetings could introduce volatility. Such shocks could potentially lead to a sharp unwinding of carry trades and further yen strengthening if market conditions deteriorate.