John At The Center

this suggests that CP is not being used to finance any active, economic purpose in the Land of the near-Free Loan itself – an inference further reinforced by the fact that domestic financial CP outstanding has plummeted to what is at least a 9-year low. Thus, the correlation between funding and forex hints that the raising of dollars for use abroad is indeed what is at work.

via FT Alphaville » Blog Archive » Debunking carry-trade denial.