Turkey’s World-Beating Lira Carry Trade Has Room for More Gains (2024)

Borrowing in U.S. dollars and investing in Turkish lira has been the best-performing carry trade in emerging markets over the past six months, and some bankers say that’s just the beginning as long as orthodox policies are safeguarded and inflation starts slowing.

The arbitrage trade, in which investors borrow in less expensive regions like the US, Europe and Japan to invest that money in higher-yielding financial assets in places like Turkey, has handed investors who borrowed in dollars a gain of more than 12% in the past six months, according to data compiled by Bloomberg. That compares with gains of about 8% for its closest competitors, Mexico and Russia.

Turkey’s World-Beating Lira Carry Trade Has Room for More Gains (2024)
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