Question

1. Why did the yen carry trade work during the early 2000s?

Answer 1

Answer:

Interest rate was almost Zero.

Explanation:

In the early 2000s, the interest rate of Japanese Yen was almost zero. That's why many Japanese businesses started to borrow Japanese Yen and started investing in the US treasury bills. In that time, the interest of the US treasury bill was 3-4%. Because of this reason, Yen Carry trade worked in the early 2000s.