Carry Trade Regains Oomph With Emerging Markets Dodging Fed Squeeze
- Central bankers have juiced up carry returns through hikes
- Emerging-market currencies bolstered by high reserve buffers
This article is for subscribers only.
The hunt for higher yields is all set to return to emerging markets in 2019 as central banks zealously guard their interest-rate advantage over the Federal Reserve.
From Indonesia to South Africa, Mexico and Russia, policy makers have countered Fed tightening with rate hikes this year, sometimes even preemptively. That’s left their currencies with greater risk-adjusted returns for traders who borrow in dollars and invest in developing nations.