hisah wrote:[quote=Scubidu]@hisah. What's ya take on a shilling carry trade fueling part of the KES depreciation. Forwards by foreigners looking to buy west african eurobonds. I sure the dollar yields are worth the risk, but, let's not forget the current rising yields in the primaries ... 300bps for two year yields ... money mart is getting tighter.
I find the ksh carry trade very confusing. CBK never seems in control? How do u gauge this?
As for the USD, 2yrs are not painting a nice picture. Considering the fed fund rate is next to zero...
I've not paid attention to the west africa eurobonds. What are the foreigners chasing? I see likely defaults due to volatile politics; ivory coast being the recent example.
http://blogs.reuters.com...carry-trade-never-dies/[/quote]
@hisah. I'm also trying to make sense of this carry. I was told about it recently. They don't seem to be making any gain from this, from the carry itself IMHO, although, they seem to have hedged the exchange risk. is the kes really that liquid, to make it useful for the carry?
About 45% of the capital account (like almost USD1 bn) are short term flows which CBK can't control ... but look at what they're doing now, buying hard currency (increasing volatility) supposedly to pay off external debts (which I find unlikely). It's not the right time to be doing this. Yes, as you say the west african eurobonds aren't that attractive ... maybe there are some whose default rise is lower than other. your getting like 8% yield on some of them right.
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