Emerging-Market Carry Trades Risk More Losses After Decade of Gains Wiped Out
- Lower yields reduce allure of EM currencies: TD Securities
- BofA says inverted volatility curve suggests EMFX vulnerable
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The coronavirus outbreak wiped out a decade’s worth of returns for emerging-market carry trades, and more losses may be just around the corner.
A decline in yields due to central bank stimulus has diminished the attractiveness of many emerging currencies, reducing their allure as carry targets, according to TD Securities Inc. Developing-nation currencies remain vulnerable to further losses due to uneven inflows and elevated volatility, Bank of America Corp. says.