The Foreign Exchange Market Is Suffering From The "Waterloo" Financial Crisis.

Due to the double blow of the sharp fluctuations in global exchange rates and interest rates, the annual rate of interest trading in the global foreign exchange market has been worst since the financial crisis this year.

Oliver Harvey, an analyst at the exchange rate strategy of Deutsche Deutsche, said in the report that the Fed's increase in interest rates, China's policy shocks, and emerging market collective outbreaks have had a impact on the interest rate trading.

Carry trade refers to the borrowing of a currency at a lower cost to invest in high-yield assets outside the currency issuing area.

The sharp rise in exchange rate and interest rate volatility will cause a fatal blow to the carry trade. Large fluctuations will erase profits from interest spreads, and the way to earn profits will become less and less.

However,

It is believed that there will still be a chance of survival next year. "If China's economy stabilizes next year and commodity prices will stop, the interest rate trading can still expect positive results."

This year, the emerging market currencies have plummeted, and the Central Bank of China has cut interest rates and let them go.

Carry trade has lost important source of interest.

Shao Yu, chief economist of Orient Securities, recently wrote, "China in 2016"

The risks are still great, necessary hedging or unavoidable.

The overall level of interest rate in 2016 is expected to go further. The yield of treasury bonds in 10 years is likely to reach 2.6%.

This means that cross border interest trading is becoming increasingly unprofitable and part of the hot money will be withdrawn from the Chinese market.

Dow Global Consultant Mark Dow is more pessimistic.

NBC financial channel CNBC quoted Dow as saying that a good day for the carry trade is likely to be over. "Because of the very small number of countries adopting the pegged exchange rate system (pegged exchange rates), the real carry trade has been difficult to exist."