Dollar-Funded Carry Trades Post Longest Winning Streak Since 2008 on 18% 2025 Gain
Updated
Updated · Crypto Briefing · Aug 23
Dollar-Funded Carry Trades Post Longest Winning Streak Since 2008 on 18% 2025 Gain
3 articles · Updated · Crypto Briefing · Aug 23
Summary
Bloomberg’s eight-currency dollar-funded carry index logged its longest winning streak since 2008 after returning 18% in 2025 and another 1.3% by late January 2026.
Nearly 200 consecutive days of lower volatility in emerging-market currencies than in G7 peers helped sustain the trade, alongside wide rate differentials and a weaker dollar funding base.
Morgan Stanley, Bank of America and Goldman Sachs say strong capital inflows into emerging markets—running at the fastest pace since 2019—have kept both EM and some G10 carry trades attractive.
The main threat is a volatility shock or hawkish Fed shift that narrows yield gaps, a pattern that has previously triggered abrupt unwinds such as in 2008, 2013 and the August 2024 yen carry selloff.