Financial Times FT.com

Carry traders at the ready

By Peter Garnham

Published: October 4 2009 11:53 | Last updated: October 4 2009 11:53

As risk appetite returns to financial markets, so the carry trade invariably emerges as a dominant theme on the world’s currency markets.

The strategy, in which low-yielding currencies are sold to finance the purchase of higher-yielding currencies, should not offer excess returns according to purchasing power parity theory, as currencies of low-interest rate countries should appreciate to compensate for lower returns.

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