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Has global fiscal stimulus killed the ‘carry trade’?
Interesting article posted on Bloomberg (with thanks to CMAP’s commentary section for bringing it to our attention), positing that central banks’ stimulus has effectively killed the ‘carry trade’ in FX, whereby lower yielding currencies are borrowed to invest in higher yielding ones — which normally leading to a lot of cross-currency trading.
Is this the reason that FX trading volumes — especially institutional volumes — remain well below previous years’ levels, even as some volatility has picked up in the currency markets of late?
Makes for interesting reading — for the full article click here. Would love to see some of your comments, please enter them below.
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