This entire fall is Linked to Japan Currency YEN.
Here is Chronology of Events
1. 2 Weeks Back Japanese YEN was trading at 165 Yen for 1$. That is 1$=165Yen
2. Since Last 30+ Years Japan Has Had Zero Interest Rates (Absolutely Zero Interest On Loans as well)
3. Many Orgs/Funds/HF took advantages of this and taken large amount of loans from Japane & invested same in US markets (Double advantage zero interest money and Dollar was rising always against Yen)
4. Also since the investments are higher most hedge funds will also hedge their positions by shorting Yen as well (Similar To Selling Call Options to get even easier money)
5. Everything was going absolutely well people were making free money for years and that's why japan is the biggest investor in Us markets due to its interest in free money
6. What Changed ? Last week JCB (Japan Central Bank Like RBI in india) decided to raise Interest rates by 25 bps after almost 30+ years . And boom everything changed from here
7. Now zero interest money is no more zero interest and all your existing loans are now having additional cost so most or these funds who had taken this free interest loan and invested in us market started selling everything they had to get money and close loans ( since US market was already overbought and there is no more zero interest on these loans)
Result = DJI Fallen almost 2000 points in 2-3 days
8. Due to the rise in interest Yen started rising against the dollar where it reached 1$=145Yen ( that was too much of a rise of currency in just 2 days)
9.Now most of these people who had shorted Yen in point 4 above had to cover as yen shot up like anything in 2 days 😂😂 inke call options jo inhone beche the sensex jaise pagal hoke bhagne lage
10. Ab aaap hi socho aapne apna Yen ka paisa loan liya tab 1$=165yen tha jo aapne us market me invest kiya and achanak yen 1$=145 hogaya to regardless of your returns aapka to sidha sidha cross currency 13% ka loss hogaya ( say u taken 16500 yen loan that was equal to 100$ and now 16500 yen equals to 113$ ab bhale hi interest nahi hai loan ko lekin 13% ka to sidha fatka baith gaya na 😂😂 yen badhne k vajah se )
11. Aise situation me mal bech bachke nikloge nahi to kya karoge 🤣🤣🤣
The question is what is the solution to this situation now ?
The solution is simple the US needs to reduce interest rates to counter this
Kahin Pe khadda hua to kahi pe pahad banega hi banega . Agar pahad Japan me bana hai to khadda US ko karna padega
Thats what happened over the last few days causing panic selling across japan and us markets
