Although today’s biggest headlines were in the Middle East and South Asia, as I was scrolling through the headlines about Japan I couldn’t help but notice this lead: Japanese Yen Has Huge One-Day Decline; Helps Market Rally.

Really now. When was the last time you heard a market rally over currency devaluation? Unfortunately for the yen, it was the victim of a financial practice known as the carry trade. In (relatively) plain English this means borrowing in a currency offering low interest and investing in high-interest currencies — or, in other words, taking advantage of different interest rates in different markets to make money.

Because the Bank of Japan (BOJ) has kept Japanese interest rates so low, the yen has been on the borrowing end of the carry trade, and traders have used this yen to invest in developing markets around the world. Unfortunately for Japan, with the global financial system in turmoil and developing markets looking increasingly risky, investors are pulling out of these investments and are converting assets in other currencies back into yen. Demand for yen goes up, and the value of the yen rises against everything, even the dollar (one of the other currencies currently on the rise).

Or something like that. The end result of the whole mess is that Japanese exports are more expensive on foreign markets (due to the strong yen), and Japanese manufacturers are freaking out.