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One of China's Most Popular Trades May Be Coming to an End

Carried away?
Dim the lights. The carry is over.

Dim the lights. The carry is over.

Photographer: Brent Lewin/Bloomberg

Years of the Chinese yuan practically pegged to the U.S. dollar gave succor to a massive carry trade that involved mainland speculators borrowing from overseas banks at relatively low rates and then investing in higher-yielding renminbi-denominated assets. Pocketing the spread between the two netted hefty returns, but the era of "peak" China carry looks to be coming to an end following China's move to devalue its currency.