Recent Trends in Japanese Foreign-Exchange Margin Trading
Financial Markets Department
Tai Terada, Naoto Higashio, Jun Iwasaki
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Foreign-exchange margin trading by individual investors has become common in Japan during the last several years. This paper uses available data to review recent trends in Japanese foreign-exchange margin trading. It finds that turmoil in international financial markets, triggered by the "subprime debacle" since August 2007, resulted in a decline in outstanding positions for foreign-exchange margin trading. There was nonetheless a steady increase in account numbers and trading volumes. Since August 2007, trading approaches and currency selection have also changed. For example, leverage has declined, dollar/yen turnover ratios have increased, and there have been shifts to high-yield currencies.
Bank of Japan Review is published by the Bank of Japan to explain recent economic and financial topics for a wide range of readers. This report, 2008-E-3, is a translation of the original Japanese issue, 2008-J-7, published in August 2008. The views expressed in the Review are those of the authors and do not necessarily represent those of the Bank of Japan.
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