When Japanese interest rate values were lesser and USA interest rate values greater it was profitable to sell Japanese Yen, buy USA Dollars and collect the interest rate spread (carry trade). I suspect the net result was to drain the Japanese economy of Yen. No matter how much Yen the Bank Of Japan issued, people could exchange Yen for USA Dollars and collect an easy interest rate spread. No need to work; the Japanese economy was slow for about 20 years. Now the interest rate differential is decreasing. Perhaps the Japanese are not interested in the carry trade now. I wonder what happens to all the Yen once it returns home to Japan. One possible outcome is the abundance of Yen creates a surge in the Japanese economy, stimulating both consumption and production.
the carry trade didn't affect the japanese money supply, that yen never 'left'. people borrowed in yen then SOLD the yen to buy NZD. the person who got the yen could go and create inflation in japan by buying a good. all those yens printed are still in japan
Well most people just start trading without taking time to learn current market dynamics. Its like some clowns who come looking for ES tick size !!!! FODDER