The Biggest Risk From the Dollar's Drop May Not Be What You Would Guess
- Cracks emerge in carry trade as yen, euro stage rally
- Societe Generale says euro provides opportunity to double down
Pimco's Crescenzi Says Stalled-Out Dollar Is Good News
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A high-risk corner of the $5.1 trillion-a-day currency market has become the collateral damage of the dollar selloff.
Whipsawed by the greenback and confronted by U.S. policy confusion, carry trades were supposed to be a rare bright spot for investors who want to stay away from the world’s biggest reserve currency. Under the strategy, you borrow in low-rate alternatives such as the yen, and buy high-yielding peers like the Mexican peso, benefiting from low volatility and the emerging-market rally.