Carry trade back but unwind is a distant threat, says BarCap

flyingdollars

Investors have been putting on foreign exchange carry trades “aggressively” in recent months, say analysts at Barclays Capital, but the risk of a disastrous unwind is at its remotest level since 2007.

The carry trade consists of going long currencies with high interest rates and shorting currencies with lower interest rates, to pick up the difference in yield between them. It has previously proven popular among a broad spectrum of investors, from sophisticated hedge funds to Japanese housewives.

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