Goldman Sachs Analyzes Optimal Environment for Carry Trade in 20 Years

Carry trades are once again on the rise, with Goldman Sachs analyzing that the widening interest rate gap between major countries and low exchange rate volatility have created the most favorable investment environment in 20 years. A carry trade is a strategy that involves borrowing currency from a country with low interest rates to invest in assets in a country with high interest rates, thereby profiting from the interest rate differential. Last summer, a large-scale liquidation of positions caused volatility in global stock markets, but the current market environment has been assessed as significantly different. Goldman Sachs stated that approximately 70% of the returns in the G10 currency markets this year have come from the interest rate differences between countries. With expectations that major central banks will not make significant changes to their monetary policies, exchange rate volatility remains at a low level. In particular, the Japanese yen, Swiss franc, euro, and Canadian dollar have been presented as suitable funding currencies for carry trades. Experts point out that exchange rate volatility remains a risk factor, and future changes in monetary policy by major central banks will be a crucial variable in determining the sustainability of carry trades.

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