Will Japan's interest rate hike on December 19 lead to a financial storm? The truth will shock you!
I believe the claim that Japan's interest rate hike on December 19 will cause a massive exodus of arbitrage funds, thereby triggering a financial storm, is highly unreliable and lacks substantial evidence.
First, let's look at the timeline of Japan's interest rate hikes. Starting from 2024, Japan has been gradually raising interest rates, completing four hikes by January 2025, with rates increasing from -0.1% to 0.5%. These rate hikes have been ongoing for two years, so if those arbitrage funds really wanted to withdraw, they would have found an opportunity to do so long ago. It's illogical to think they would wait until the specific date of December 19 to collectively withdraw.
Next, consider the scale of the funds. Experts estimate that even if these arbitrage funds did withdraw, the scale would only be around $20 trillion. In such a vast global financial system, this amount is relatively insignificant. To suggest it could trigger a financial storm seems exaggerated and hard to believe.
In this era of information overload, various opinions and messages flood in daily like a tide. Especially information related to important fields like finance, we cannot just take everything at face value; it’s crucial to verify the information ourselves.
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