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Carry trades basket
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Author Carry trades basket
probtrader
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Joined: 22 Oct 2005
Posts: 130
PostPosted: Thu Sep 13, 2007 6:26 am    Post subject: Carry trades basket Reply with quote
I am puzzled by this simple carry trade system: http://www.thefinancialwhiz.com/2007/03/24/the-chinese-yuan-carry-basket-experiment/
The author suggests building a portfolio out of a number of exotic carry trades to diversify currency pairs risk. In particular, he shorts CNY (Chinese Yuan) to take advantage of the negative interest rate offered by oanda.com and use the proceedings to buy a number of high-interest currencies like ZAR, TRY, INR, NZD.

It looks like an effective way to diversify an equity portfolio, yet it sounds too good (and easy) to be true.
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