The Euro Has Never Been This Popular With Emerging Markets
- Ultra-low yields hard to resist as bond issuance hits record
- Carry trades funded by euro outperform those based on dollar
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The killing of an Iranian general and a Chinese viral epidemic have dominated headlines so far this year, but January will also be remembered as the month emerging markets’ euro fixation shifted up a gear.
The single currency was already popular in the developing world for its low yields, but the U.S. dollar’s gains since the New Year have made the euro a refuge for borrowers and carry traders. Sales of new bonds in the currency have hit a monthly record -- after an annual best in 2019. Euro-funded carry positions proved as profitable as dollar-based wagers were loss-making.