Emerging Market Carry Trade Hits Longest Winning Streak Since 2008
· Business · Bloomberg, Economic Times
Investors are increasingly favoring emerging-market carry trades, marking the longest period of sustained performance for this strategy since 2008. A carry trade involves borrowing in currencies with low interest rates to invest in assets denominated in currencies with higher yields. Cathy Hepworth, head of the emerging-markets debt team at asset manager PGIM, identifies this as a high-conviction theme across developing nations. The strategy relies on the interest rate differential between countries to generate returns. The current market environment has supported this trend as investors seek higher returns in developing economies.
Why it matters
The resurgence of carry trades signals increased capital flows into developing economies, which can impact currency stability and borrowing costs for both emerging markets and global investors.
Read the original report — Bloomberg
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