G7 Meeting: Status Quo Commentary Gives Carry Trades the Green Light
The G7 meeting of finance ministers over the course of the weekend resulted in little fanfare, as the communiqué signaled that there was no intent on any official’s part to stem the rapid depreciation of the US Dollar. In fact, much of the statement proved to be no different from previous meetings, noting that exchange rates should reflect economic fundamentals and that excess volatility in foreign exchange markets is bad for global growth.
Unsurprisingly, the only direct commentary was in regards to China, as the communiqué noted that the country’s current account surplus was evidence of the need for a stronger yuan. Nevertheless, with China likely to continue taking their slow and steady approach to allowing the yuan to appreciate, the G7 has effectively given traders the green light to keep carry trades in play.