Yuan Carry Trade Can Prosper Even After Yen Version Collapsed

The hugely popular yen carry trade crashed and burned this month as Japan’s currency surged. A less well-known version of the strategy is likely to be more immune to those kind of shocks.

Trades involving borrowing yuan to buy higher-yielding assets are set to be more resilient as China’s central bank keeps its monetary policy dovish, Royal Bank of Canada says. The yuan carry trade differs from the yen one as it mainly involves exporters and multinationals instead of speculators, Macquarie Group Ltd. data shows.