What is the yen carry trade, and why is it now melting markets?

Tokyo | Investors are rushing to unwind one of the most lucrative investment strategies in recent years: borrowing a weak Japanese yen at near-zero interest rates to buy high-yielding assets in other markets, such as US tech stocks.

While Friday’s weaker-than-expected US jobs data was the catalyst for the global market meltdown, it wasn’t the only culprit behind the brutal sell-off that sent Japan’s sharemarket tumbling the most since the Black Monday crash in 1987, with Australia’s S&P/ASX200 off more than 3 per cent.