Written by: TechFlow
A butterfly flapping its wings in Brazil could cause a tornado in Texas a month later.
On July 31, the Bank of Japan raised its policy interest rate from 0% to 0.1% to around 0.25%, the first rate hike since Japan ended its negative interest rate policy in March this year.
Over the past month, the yen has appreciated by about 8% against the dollar. As expectations for a narrowing of the U.S.-Japan interest rate gap grow, the trend of reversal of carry trades is triggering a large-scale "liquidation" around the world.
Some financial markets around the world experienced Black Monday.
Japan's stock market experienced an epic plunge, with the Nikkei index plunging 9% and the Topix index triggering circuit breakers twice, marking the biggest single-day drop in eight years.