From the current condition, hot money became excessively popular promotion power in the forex market. Before the global economy was not stable, the reverse risk after pushing up the asset price was bigger than 2007.
The hot money had two resources. One was the hedge capital that lent from financial system and the other was that some countries existed huge trade surplus because of trade globalization.
Before the financial crisis, the carry trade of yen was one of stable resource of hot money. The mode of dollar carry trade displaced the yen carry trade since Libor interest rate of dollar was lower than the yen. Comparing with low interest rate for a long term in Japan, the monetary policy of Fed was more flexible. With the stable economic recovery, the possibility of increasing interest rate was gradually increased. Once realized, the hedge trading of dollar would rapidly reduce. FXDD