, Columnist
For Currency Traders, August Was No Day at the Beach
Emerging markets have been getting hammered this month. A less predictable Chinese yuan is only going to make things worse.
Life’s a beach.
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Emerging-market currencies are having their worst month since May 2016.
To confound matters, some of the usual rules of investing have broken down. When the global economic outlook is dimming, traders often sell currencies of small, open, trade-reliant economies – say, South Korea’s won – and cling to higher-yielding assets, such as the Turkish lira. This is driven by the so-called carry trade, when investors borrow money cheaply in low-rate markets to buy riskier assets.