Carry trades have been shown to lead to significant changes in foreign exchange markets by producing shocks to interest rate differentials. This study uses fundamentals and the chartist model for the foreign exchange markets in which market participants can choose to become carry traders. It shows that carry trades play an important role in determining foreign exchange rates. Carry trades can influence exchange rates (Japanese yen and Euro against the US dollar). Also, the relationship between carry trades and three stock prices are examined empirically. As the rate of carry trades increases, stock prices in Japan and Germany rise. However, during the period of the Lehman shock, the increasing rate of carry trades may have caused a decline in Japanese stock prices, and huge amounts of money were reported to have been invested in carry trades at that time using interest rate differentials. Massive capital for carry trades seem to have been flown into foreign currencies (ex, FX) rather than stocks.
| Published in | International Journal of Business and Economics Research (Volume 2, Issue 4) |
| DOI | 10.11648/j.ijber.20130204.11 |
| Page(s) | 84-90 |
| Creative Commons |
This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited. |
| Copyright |
Copyright © The Author(s), 2013. Published by Science Publishing Group |
Carry Trade, Chartist, Exchange Rate, Fundamental, Stock
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APA Style
Yutaka Kurihara. (2013). Do Carry Trades in the Foreign Exchange Markets Influence Stock Prices. International Journal of Business and Economics Research, 2(4), 84-90. https://doi.org/10.11648/j.ijber.20130204.11
ACS Style
Yutaka Kurihara. Do Carry Trades in the Foreign Exchange Markets Influence Stock Prices. Int. J. Bus. Econ. Res. 2013, 2(4), 84-90. doi: 10.11648/j.ijber.20130204.11
AMA Style
Yutaka Kurihara. Do Carry Trades in the Foreign Exchange Markets Influence Stock Prices. Int J Bus Econ Res. 2013;2(4):84-90. doi: 10.11648/j.ijber.20130204.11
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Download@article{10.11648/j.ijber.20130204.11,
author = {Yutaka Kurihara},
title = {Do Carry Trades in the Foreign Exchange Markets Influence Stock Prices},
journal = {International Journal of Business and Economics Research},
volume = {2},
number = {4},
pages = {84-90},
doi = {10.11648/j.ijber.20130204.11},
url = {https://doi.org/10.11648/j.ijber.20130204.11},
eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijber.20130204.11},
abstract = {Carry trades have been shown to lead to significant changes in foreign exchange markets by producing shocks to interest rate differentials. This study uses fundamentals and the chartist model for the foreign exchange markets in which market participants can choose to become carry traders. It shows that carry trades play an important role in determining foreign exchange rates. Carry trades can influence exchange rates (Japanese yen and Euro against the US dollar). Also, the relationship between carry trades and three stock prices are examined empirically. As the rate of carry trades increases, stock prices in Japan and Germany rise. However, during the period of the Lehman shock, the increasing rate of carry trades may have caused a decline in Japanese stock prices, and huge amounts of money were reported to have been invested in carry trades at that time using interest rate differentials. Massive capital for carry trades seem to have been flown into foreign currencies (ex, FX) rather than stocks.},
year = {2013}
}
TY - JOUR T1 - Do Carry Trades in the Foreign Exchange Markets Influence Stock Prices AU - Yutaka Kurihara Y1 - 2013/09/20 PY - 2013 N1 - https://doi.org/10.11648/j.ijber.20130204.11 DO - 10.11648/j.ijber.20130204.11 T2 - International Journal of Business and Economics Research JF - International Journal of Business and Economics Research JO - International Journal of Business and Economics Research SP - 84 EP - 90 PB - Science Publishing Group SN - 2328-756X UR - https://doi.org/10.11648/j.ijber.20130204.11 AB - Carry trades have been shown to lead to significant changes in foreign exchange markets by producing shocks to interest rate differentials. This study uses fundamentals and the chartist model for the foreign exchange markets in which market participants can choose to become carry traders. It shows that carry trades play an important role in determining foreign exchange rates. Carry trades can influence exchange rates (Japanese yen and Euro against the US dollar). Also, the relationship between carry trades and three stock prices are examined empirically. As the rate of carry trades increases, stock prices in Japan and Germany rise. However, during the period of the Lehman shock, the increasing rate of carry trades may have caused a decline in Japanese stock prices, and huge amounts of money were reported to have been invested in carry trades at that time using interest rate differentials. Massive capital for carry trades seem to have been flown into foreign currencies (ex, FX) rather than stocks. VL - 2 IS - 4 ER -
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