An index tracking carry trade returns for eight emerging market currencies reached its highest level in seven years as of late May 2025. Carry trades involve borrowing in low-yielding currencies and investing in currencies with higher returns. Asset managers have notably increased their long positions in German mark (DEM) currencies and Mexico's peso, with the latter reaching a nine-month high. This surge in carry trade activity has led to record gains in emerging market currencies, highlighting renewed investor interest in these strategies amid global currency dynamics.