Why does Japan's interest rate hike have such a big impact on global financial markets: A few years ago, when the Bank of Japan's interest rate was thought to be negative, it meant that you were given an incentive to borrow from the bank. For example, in Japan, you can buy milk at a low cost or even at a negative interest rate. You can sell these cheap milk to countries like the United States and Europe, which have higher interest rates, and make a profit from the price difference. This is one of the reasons that has recently caused severe fluctuations in global financial markets: 🌤️ A few years ago, many speculators borrowed Japanese Yen: Speculators borrowed Japanese Yen at low interest rates. ⛅️ Then they converted these Japanese Yen into US Dollars or Euros. 🌥️ Then they invested in the United States or Europe: They used these dollars to invest in assets such as American bonds or stocks because the interest rate there was higher, so they could make more profit. Over the past two years, American stocks have really risen, especially chip stocks. ☀️ Profit difference: The profit comes from the difference between the low interest rate paid in Japanese Yen and the higher return obtained in the United States or Europe. 🧐 Therefore, imagine a scenario where such arbitrage transactions reach trillions of dollars worldwide, the energy would be incredible because even Warren Buffett does it, but he issues Japanese Yen bonds and invests in Japanese stocks himself. If Japan's interest rate suddenly changes and this trend strengthens significantly for a while, it causes panic and leads to a wave of risk expectations. Because the demand for Yen given by the Bank of Japan decreases, and the Bank of Japan also wants to recover its milk as soon as possible. This is the reason for the widespread panic decline in global financial markets recently. 🧐 As shown in the picture below