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SKorea warns yen carry trade could cause instability in global financial markets
Tue, Aug 14 2007, 06:34 GMT
http://www.afxnews.com
SEOUL (Thomson Financial) - South Korea's finance minister warned Tuesday yen-carry trade could cause international financial turmoil similar to the 1997/98 East Asian financial crisis.
Yen carry trades, or the borrowing of yen at low interest rates in Japan to invest in higher-yielding currencies and assets elsewhere, has risen sharply in recent months, although it eased back slightly over the past few days amid increased risk aversion by investors in the wake of the subprime mortgage lending woes in the US.
"Excessive yen-carry trades are one of the fundamental factors that have caused instability in global financial markets," Kwon O-Kyu said in a message to his staff.
He urged international policymakers actively to tackle the issue to avoid any risk of a financial crisis.
"If the carry trades rise too much, the trades could have a big influence on a country's economy," Kwon said.
"Big confusion such as that seen in the Asian financial crisis in 1997 could emerge if investors scrap trades suddenly."
afp/mb
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jm/mb
COPYRIGHT
Copyright AFX News Limited 2007. All rights reserved.
SKorea warns yen carry trade could cause instability in global financial markets
Tue, Aug 14 2007, 06:34 GMT
http://www.afxnews.com
SEOUL (Thomson Financial) - South Korea's finance minister warned Tuesday yen-carry trade could cause international financial turmoil similar to the 1997/98 East Asian financial crisis.
Yen carry trades, or the borrowing of yen at low interest rates in Japan to invest in higher-yielding currencies and assets elsewhere, has risen sharply in recent months, although it eased back slightly over the past few days amid increased risk aversion by investors in the wake of the subprime mortgage lending woes in the US.
"Excessive yen-carry trades are one of the fundamental factors that have caused instability in global financial markets," Kwon O-Kyu said in a message to his staff.
He urged international policymakers actively to tackle the issue to avoid any risk of a financial crisis.
"If the carry trades rise too much, the trades could have a big influence on a country's economy," Kwon said.
"Big confusion such as that seen in the Asian financial crisis in 1997 could emerge if investors scrap trades suddenly."
afp/mb
-
jm/mb
COPYRIGHT
Copyright AFX News Limited 2007. All rights reserved.
