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How the Yuan Carry Trade Is Reshaping Global Finance
Lucas and Luna explore the quietly resurgent yuan carry trade, where investors borrow Chinese renminbi at low rates to fund higher-yielding bets in emerging markets like India and Brazil. They anchor the discussion in a specific trade: a hedge fund borrowing yuan at 2.8 percent to buy Indian government bonds yielding 7 percent, netting roughly 4.2 percent after hedging costs. They examine how China's controlled currency and falling domestic rates have made the yuan an attractive funding currency, even as Beijing tries to limit capital outflows. Data from May 2026 shows the renminbi has…
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