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Popular Carry Trades Are Set Back as Yen Surge Erodes Gains

  • Bloomberg carry trade gauge posts loss in past month
  • Muted volatility points to shift from yen funding: PineBridge
Updated on

This year’s market shakeup is threatening to upend one of the most reliable trades in global currencies.

The practice of borrowing money where interest rates are low to invest where they are high, known as the carry trade, is losing its allure as the world’s cheapest funding currencies rally. A Bloomberg gauge that tracks the performance of the three highest-yielding Group-of-10 currencies versus the three lowest-yielding has generated a loss of more than 1 percent in the past month.