Buttonwood: Bucking the trend

摘要

From 2002 to 2007, foreign-exchange trading was pretty simple. Buy the currencies with the highest yields and sell those with the lowest. This "carry trade" created high returns with low volatility.rnIn theory the trade made little sense. High-yielding currencies should be compensating investors for the risk of depreciation, and low yields have been a characteristic of strong currencies like the Swiss franc. But who cared about the theory when, for a long time, the carry trade produced bumper returns?