Citi Says Biggest Carry Trade Rally in Years Has Longer to Run

Buying emerging-market currencies against the dollar this year has delivered some of the most attractive returns of the decade, and according to Citi’s head of strategy, the trade still has further to run — at least in the short term.

A more pro-actively dovish stance from the Federal Reserve, combined with caution from emerging-market central banks, will continue to bolster developing-world currencies against the dollar, Luis Costa, Citi’s head of emerging-market strategy, said in an interview.