logo |

News

    Home   >     Original    >     Main body

    Carry Trades Are Back in Focus!

    Abstract:As the Fed promised to keep interest rate at a historical low of nearly zero, forex carry trades again draw the market’s attention. Bloomberg’s analysis over 32 currencies shows that Indonesian rupiah offers the highest risk-to-reward rate in carry trades, followed by Turkish lira and Indian rupee.

      As the Fed promised to keep interest rate at a historical low of nearly zero, forex carry trades again draw the market‘s attention. Bloomberg’s analysis over 32 currencies shows that Indonesian rupiah offers the highest risk-to-reward rate in carry trades, followed by Turkish lira and Indian rupee.

    1.png

      Source: Bloomberg

      Carry trade refers to the practice to make profit by borrowing a low-yielding currency and then investing in another high-yielding currency (such as emerging market currencies). Analysis indicates IDRs carry-to-risk ratio is 0.85, TRY at 0.73 and INR at 0.56. Only about half of the surveyed currencies have interest rate higher than USD.

      After the Fed flooded the global financial system with US dollar to avoid credit squeeze, the recent forex volatility has fallen back from a decades high, making carry trades attractive again. The increasingly active carry trade market has thus seen an influx of international investors who want to seize the opportunity to make a fortune.

    2.png

      So here comes the question: Do carry trades bear risks? Just like any type of trading, carry trades involve certain degrees of risks. The prerequisite for making profits through carry trades is low market volatility, so a main risk facing carry traders is forex rate fluctuation. If forex rates fluctuate significantly, carry trade investors may end up losing not only their gains but also the principals. Therefore, investors need to conduct effective risk management in trading, keep a close eye on global forex dynamics and watch out for “black swan events”.

      As a leading forex media, WikiFX brings you live global forex updates 24/7 and industry dynamic interpretation to guide investors on their forex trading path. In addition, WikiFX has recorded the information of over 18,000 brokers across the world, offering investors a comprehensive evaluation of brokers compliance and quality. Click here to download the WikiFX App https://bit.ly/3ajawKO

    3.jpg

    Latest News

    New Zealand Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand

    United States Dollar

    • United Arab Emirates Dirham
    • Australia Dollar
    • Canadian Dollar
    • Swiss Franc
    • Chinese Yuan
    • Danish Krone
    • Euro
    • British Pound
    • Hong Kong Dollar
    • Hungarian Forint
    • Japanese Yen
    • South Korean Won
    • Mexican Peso
    • Malaysian Ringgit
    • Norwegian Krone
    • New Zealand Dollar
    • Polish Zloty
    • Russian Ruble
    • Saudi Arabian Riyal
    • Swedish Krona
    • Singapore Dollar
    • Thai Baht
    • Turkish Lira
    • United States Dollar
    • South African Rand
    Current Rate  :
    --
    Amount
    New Zealand Dollar
    Available
    -- United States Dollar
    Risk Warning

    The Database of WikiFX comes from the official regulatory authorities , such as the FCA, ASIC, etc. The published content is also based on fairness, objectivity and fact. WikiFX doesn't ask for PR fees, advertising fees, ranking fees, data cleaning fees and other illogical fees. WikiFX will do its utmost to maintain the consistency and synchronization of database with authoritative data sources such as regulatory authorities, but does not guarantee the data to be up to date consistently.

    Given the complexity of forex industry, some brokers are issued legal licenses by cheating regulation institutes. If the data published by WikiFX are not in accordance with the fact, please click "Complaints "and "Correction" to inform us. We will check immediately and release the results.

    Foreign exchange, precious metals and over-the-counter (OTC) contracts are leveraged products, which have high risks and may lead to losses of your investment principal. Please invest rationally.

    Special Note, the content of the Wikifx site is for information purposes only and should not be construed as investment advice. The Forex broker is chosen by the client. The client understands and takes into account all risks arising with Forex trading is not relevant with WikiFX, the client should bear full responsibility for their consequences.

    ×

    Select Country/Area

    ×

    Select Country/Area