March 27, 2024
The Enduring Allure of the Foreign Exchange Carry Trade
By Saqib Iqbal Ahmed The Unexpected Continuation of a Lucrative Trade NEW YORK, March 27 (Reuters) – Despite initial projections of its demise, the foreign exchange markets find themselves in a peculiar state of tranquility, prolonging the viability of the lucrative carry trade beyond expectations. The carry trade, a strategy involving borrowing in a low-interest-rate currency to invest in a higher-yielding currency, was anticipated to wane as major central banks shifted from rate hikes to easing their policies. However, the anticipated shift has not materialized, maintaining stability in currency markets and allowing the carry trade, which thrives on such stability,