In a structural sense, the high-profit “pull” of the capitalreceiving countries was clearly fundamental. But short-term variation (surges and reversals) was often triggered by events in world markets.
A number of researchers have found a close relationship between interest rate movements in the capital-exporting countries and capital flows.7 The rise in US interest rates in early 1994 was an important trigger in the Mexican problems, and the strengthening of the yen in May/June 1997 was a factor in calling into question the continuing profitability of the “yen carry”.