A Yen Position For Speculators.

Is it time to reboot the yen carry trade? The Japanese currency is at historic highs, with most logic pointing toward depreciation. That makes the trade that involves borrowing cheaply in yen and investing elsewhere look interesting -- but volatility makes it perilous. Ultra-low interest rates in Japan led hedge funds and small investors alike to borrow heavily there and invest in higher-yielding securities elsewhere in the boom years before the 2008 crisis. Today, using this so-called carry trade, in theory an investor can borrow for next to nothing in yen and invest the money fairly safely for much higher returns, for example, in two-year Australian government bonds yielding around 4.75 percent. [ABSTRACT FROM PUBLISHER]