Currency volatility set to wipe out emerging-market carry trades | Forex Factory

  • Currency volatility set to wipe out emerging-market carry trades

    From finance.yahoo.com

    Emerging market investors are turning increasingly wary of carry trades as the threat of tariffs from the Donald Trump administration and the prospect of further dollar gains squeeze returns. Latin American currencies, often bought as part of such trades, face pressure from domestic fiscal issues along with the prospect of trade tensions with the US, according to Mackay Shields and Pictet Asset Management. Carry trades involve borrowing in currencies from countries with relatively-low interest rates, like the yuan or yen, and investing those funds in markets with higher rates. Yen-funded trades are vulnerable as ... (full story)

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ffghost
Jan 26, 2025 4:01pm
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Quoting Vancarbon
There’s that word again Carry trade . The leverage that keeps this house of cards together , like a soft gelatine. Buying with leverage and providing liquidity for speculative trading. The whole premise of finance is now leveraged plays on interest play differentials
"Meet the new boss, same as the old boss".

The world of finance has been this way since history began recording the cyclical nature. Tenuousness > steady growth > speculation > over speculation > restorative cycle (severity dependent upon size of bubble/geopolitical interruptions) > "repeat cycle". The question is: how far into the cycle are we today?
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ffghost
Jan 26, 2025 4:51pm
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Quoting Vancarbon
{quote} Hi ff Nice to see you participate my old friend . Regards your comment . It’s very true , historical records are rather limited on many things considering the human species existence on this planet . A lot of data is subjective and empirical evidence on many confrontational issues is or should be debatable. The common denominator is and always will be , those who hold the reins of power will always abuse it and greed promotes greed . Good trading and health my old friend. I hope you’ve learnt to be concise , apparently...
Haha, yeah, long windedness is my cross to bear. 2025 is already shaping up to be a wild ride. Strapping in for this week. I'll say this though: if 2025 = 2017 in terms of US equity market direction, I'm on board

Best of luck to you as well this year!
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