I believe that those who have a little foundation in economics are familiar with the so-called "Japan's lost 20 years". After the bursting of Japan's bubble economy in the early 1990s, the economy fell into secular stagnation and entered the so-called "Lost Decades." During this period, economic growth was slow, and the willingness of companies and individuals to invest was sluggish, which led to continued deflation. In response to the economic downturn, the Bank of Japan began to implement a low interest rate policy in the late 1990s, reducing the benchmark interest rate to near zero, hoping to stimulate economic activity by reducing borrowing costs.

Officially, in this context, former Japan Prime Minister Shinzo Abe launched a series of economic policies after taking office for the second time in 2012. The core objectives of these policies are to stimulate economic growth, end long-term deflation, and address the structural problems of Japan's economy. The core framework of Abenomics consists of "three arrows", and here I will briefly describe its bold monetary policy, which mainly includes two aspects: First, the Bank of Japan has implemented a large-scale quantitative easing policy. This means that the Bank of Japan is pumping large amounts of money into the market by buying government bonds and other assets to drive down interest rates and increase liquidity. The second is that the Bank of Japan officially introduced a negative interest rate policy in 2016. The policy is intended to boost consumption and investment and boost inflation expectations by further reducing the cost of borrowing between banks and encouraging more capital to flow into the real economy. The so-called "negative interest rate" is mentioned here slightly, not to mean that the lender of the funds also needs to pay interest to the borrower, but to refer to the negative real interest rate, that is, the interest is lower than the domestic inflation rate.

Against this backdrop, a type of carry trade has become popular, the JPY Carry Trade, which has been given an interesting name to the traders who do it, called Mrs. Watanabe. The so-called yen carry trade

Refers to an investment strategy based on interest rate differentials. Its basic principle is to borrow money in low-interest currencies (such as the Japanese yen) and then invest the money in high-interest currencies or high-yielding assets, earning interest rate differentials from them.