For currency speculators around the world, the trade has long been a no-brainer: simply borrow yen, which costs nothing because of sub-zero interest rates in Japan, and then park the money anywhere yields are higher, earning a tidy profit from the difference.
But now, a surprising low-cost alternative to the Japanese currency has started to emerge — this time from China. In the past month, Invesco, Goldman Sachs, Citigroup and TD Securities all recommended the yuan as an attractive option for funding so-called carry trades as it weakens toward historical lows.