Currency carry trade losses overshadow diversification benefits of currency

Guilt by association


Currency managers still have some way to go to shake the stigma of being loss-making carry traders in the fallout of the financial crisis. Even those that steered clear of the strategy still face an uphill battle to regain the confidence of investors burned by steep losses as markets deleveraged.

Certainly in the run-up to the crisis, the strategy, which funds exposure to high-yielding currencies by borrowing in low-yielding currencies, attracted a broad spectrum of investors into the market

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