Thursday, February 18, 2010

The Carry-Trade at Full Steam: Using Yens to Invest in Brazilian Real

Japanese Fund manager Japan Toshin will offer next week to retail investors a fund through which they can invest in the Brazilian currency and other emerging market assets, according to a report published by Brazilian newspaper O Estado de Sao Paulo.

More than 80% of Toshin funds are targeted at emerging markets, with Brazil and Asian countries being the main targets. The offer to be launched next week is officially estimated at U.S. $43B. This projection, however, is always made well above the capture actually expected as the fund owners have a higher cost if the limit set is exceeded.

Japanese interest rates are currently at 0.1%, while Brazil's are at 8.75%, and expected to rise soon.

Chart of global rates:

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