The Japanese yen today hit a four-month high against the US dollar and euro, heightening concerns prompted by higher volatility in debt and equity securities over an unwinding of the multi-billion dollar carry trade.

The carry trade describes activity in which investors borrow in lower valued currencies to invest in higher-yielding ones such as the New Zealand dollar. The aim is to capture the difference between the rates - which can often be substantial, depending on the amount of leverage the investor chooses to use.