By lowering the fed funds rate this much below Europe, the U.K., China and most emerging markets, the Fed has re-established the dollar carry trade.

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The previous day Liu Mingkang, China's chief banking regulator, blasted Washington for its low interest rates and for the falling dollar, which, he claimed, was encouraging a dollar carry trade and global asset-price bubbles.

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This can be viewed as the dollar-carry trade, the risk trade, or a hedge against further dollar losses.

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Stocks surged again on Tuesday and with a near-zero cost of borrowing, the dollar remains a favored tool in the carry trade, which naturally weighs on its worth.

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Its low interest rates, which drag down the currency, can entice arbitrageurs to borrow yen and buy higher-yielding notes elsewhere (see the crushing run-up in the Kiwi dollar) in what is called the carry trade, while favorably priced imports of Japanese manufacture, especially autos, are rubbing salt in wounded places like Detroit.

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