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Morgan Stanley: Yen Rise Won't Affect Rates
Morgan Stanley analysts have reported that the recent rise of the Japanese yen does not threaten the carry trade strategies in emerging markets, provided it does not coincide with other catalysts that could increase market volatility. The "carry trade" strategy relies on borrowing at low costs in currencies with low yields and then investing the liquidity in higher-yielding assets. Data shows that this strategy has held up despite some currencies, like the riyal and peso, weakening against the yen. The yen's value against the dollar reached its highest level since mid-February at 152.89, supported by expectations that the Bank of Japan will raise interest rates, although it later pared its gains.
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