Currency investors are rethinking carry trades, a popularstrategy in which investors borrow in a currency with low interestrates and buy a currency with high interest rates, according to theWall Street Journal. As central banks around the worldlower interest rates, the gap that carry trade investors arecounting on between low-yielding and high-yielding currencies hasnarrowed, cutting in the profitability of carry trades.
Investors are adapting to the change by using a wider variety ofcurrencies and doing carry trades for shorter durations, instead ofleaving them on for weeks or months.
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