The Reverse Carry Trade: When Leverage Unravels: The Hidden Force Behind Currency Crises and Market Panics

The Reverse Carry Trade
When Leverage Unravels: The Hidden Force Behind Currency Crises and Market Panics

Why do currencies suddenly collapse?

Why does the Japanese yen often surge during financial crises?

Why do global stock markets sometimes fall together even when nothing appears to connect them?

The answer often lies in one of the least understood yet most powerful forces in modern finance: the reverse carry trade.

In this accessible and practical guide, Mohamed Safouan Besrour explains how trillions of dollars move across global markets through leveraged carry trades—and what happens when those positions suddenly unwind.

Using real-world examples from the 2008 Global Financial Crisis, the 2013 Taper Tantrum, the 2015 Swiss franc shock, the COVID-19 market panic, the 2024 yen carry trade unwind, and the evolving market conditions of 2026, this book reveals why reverse carry trades repeatedly trigger currency volatility, stock market selloffs, and global liquidity crises.

Inside you’ll discover:

✓ How carry trades actually work

✓ Why the Japanese yen became the world’s favorite funding currency

✓ The hidden dangers of leverage

✓ How reverse carry trades spread across currencies, bonds, and equities

✓ The role of central banks during market panics

✓ Early warning indicators investors should monitor

✓ Practical strategies to manage risk before liquidity disappears

Whether you’re an investor, trader, finance student, economist, or simply fascinated by global markets, The Reverse Carry Trade provides a clear framework for understanding one of the most important—and least discussed—drivers of financial instability.

Because every financial crisis tells the same story:

Leverage builds slowly. Liquidity disappears suddenly.