South Africa - Who's dropping the carry trade?
African currencies have been quite a draw for emerging market investors over the past couple of years. Carry trades have been one of the most popular strategies, but how has last year's weakening of the rand affected the strategy? Alexander Campbell reports
The so-called Bric trade - taking exposure to Brazil, Russia, India and China - has been the staple of emerging market traders over the past few years. However, African currencies, and the South African rand in particular, have also presented mouth-watering opportunities for offshore investors.
One of the most popular strategies has been the carry trade. The concept is pretty simple: investors borrow in the currency of a country with low interest rates, such as Japan, and invest or lend in a
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