Goldman Sachs: Carry Strategy Remains Valid Despite Yen Intervention

Goldman Sachs has stated that the 'relative value' carry strategy remains valid despite the yen market interventions by the United States and Japan. Despite policy responses aimed at curbing the yen's depreciation, the performance of carry trades has reached its highest level since 2010. Kamaksha Trivedi, a strategist at Goldman Sachs, described the U.S. government's intervention in the yen and U.S. Treasury markets as 'small but unusual,' explaining that it reflects a clear preference for supporting other assets. The carry trade is a strategy that involves borrowing in a currency with low interest rates to invest in relatively higher-yielding assets, with the yen having been a major funding currency. Goldman Sachs expects that carry trades will record their best year since 2010 based on performance data up to August. They emphasized that yen intervention does not signify the end of the carry strategy, as the interest rate differential between the U.S. and Japan and global funding conditions will continue to be key variables in trading. Additionally, yen carry flows could also impact Korean cryptocurrency investors, potentially increasing the volatility of global risk assets such as Bitcoin and Ethereum. Goldman Sachs anticipates that global macroeconomic conditions will support further performance of carry trades in the future.

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