•  The near zero interest rate policy in Japan and the comparatively weaker Yen has given rise to carry trades. •  Oil exporters have reaped a windfall in the wake of a sharp rise in oil prices in the past few years, the huge surplus has joined the river of excess liquidity.
The recent financial market dilemma has posed a big problem to managers of all kinds of reserves. On one hand, they have to take bigger risks in order to earn a return which ranks pari passu with those of their peers. On the other, they are well aware of the business cycle and the consequence of froth.