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The Role of Carry Trades in Forex Volatility
November 17, 2023
What role do carry trades play in the foreign exchange market during periods of volatility?
Carry trades involve borrowing in low-interest-rate currencies to invest in higher-yielding assets, seeking profit from interest rate differentials. During periods of volatility, carry trades can experience increased risks as sudden market movements may prompt unwinding positions, impacting currency values. Shifts in risk sentiment can affect the attractiveness of carry trades, influencing the forex market's stability and trading volumes.
Tags : Carry Trades , Forex Market , Volatility Strategies