Get 40% Off
👀 👁 🧿 All eyes on Biogen, up +4,56% after posting earnings. Our AI picked it in March 2024.
Which stocks will surge next?
Unlock AI-picked Stocks

Lira Carry Trade Is Back After Turkish Central Bank Boosts Rates

Published 06/07/2018, 09:47 AM
Updated 06/07/2018, 01:10 PM
© Reuters.  Lira Carry Trade Is Back After Turkish Central Bank Boosts Rates

(Bloomberg) -- Borrowing in U.S. dollars and investing in Turkish lira has emerged as the world’s best carry trade in the past two weeks.

The arbitrage trade, which had sunk to the lowest level in almost 12 years before the central bank raised interest rates on May 23, has now handed investors a gain of 6.1 percent since the day after the move. That’s more than three times as much as returns from Indonesia’s rupiah and India’s rupee which also saw rate increases in the past few days.

That’s not all. Projected carry trade in the lira, adjusted for volatility, has jumped to a three-week high. If the latest rate hike manages to reduce one-month implied volatility in the currency, this gauge of expected returns will increase further.

Lira carry traders have still lost 11 percent this year as the currency plunged to successive record lows before the central-bank tightening.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.