By

This thesis discusses the evolution of the Japanese Monetary Policy and its relationship to the Yen carry trade. I track this development from inception. I specifically examine how the central Bank of Japan (BOJ) is proceeding now to withdraw Japan from the zero interest rate policy. Specifically covered are the last two years in which central bank policy changed from quantitative easing to interest rate targeting. I present evidence to show how Japan's zero interest rate policy and the evolution of Yen carry trade activity coincided with