Citigroup Reports Resurgence of Carry Trade as Hedge Funds Shift to US Dollars Amid Yen Strengthening Since August 7

Citigroup has announced the resurgence of the carry trade, highlighting a significant shift in strategy among hedge funds. Instead of borrowing Japanese yen, these funds are now utilizing US dollars to invest in emerging markets. This change comes as the Japanese yen has strengthened against the US dollar, reaching levels not seen since August 7, 2024. Analysts suggest that this strengthening of the yen could lead to concerns among investors, particularly those bullish on the S&P 500 and Nasdaq, as it may trigger reverse carry trades. Market strategists anticipate that the US dollar could continue to weaken against the yen in the coming months, indicating that the yen-funded carry trade may have substantial potential for growth.