RBC predicts the yuan carry trade will be more resilient than the yen counterpart due to China's dovish monetary policy.

Royal Bank of Canada predicts the yuan carry trade will be more resilient than its yen counterpart, due to China's dovish monetary policy and its involvement primarily with exporters and multinationals. The yuan carry trade, which involves borrowing China's currency to invest in higher-yielding assets, has shown less susceptibility to shocks and is expected to return 0.5% this quarter, with the trade involving borrowing yuan and investing in a basket of eight emerging-market currencies. China's central bank, People's Bank of China, is concerned about the potential unwinding of the yuan carry trade and its effects on financial markets.

August 25, 2024
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