The carry trade is alive and well, at least in emerging-market currencies. As safe-haven currencies in the developed world such as the Swiss franc and the Japanese yen begin to depreciate, investors are using them to fund positions in higher-yielding currencies such as the Russian ruble and Mexican peso.
The strategy didn’t work particularly well in emerging-market currencies last year. But the lag in their appreciation compared with the gains posted by advanced-economy currencies–such as the euro and the Australian dollar, which benefited as fears of a European sovereign crisis faded–could in itself be a reason for these currencies to rally this year………………………………………..Full Article: Source