The strategy of going long BRL, COP and TRY has outperformed early in the year as yield differentials remain supportive, even as crypto captures more investor attention.
A euro-funded emerging-market carry trade positioned long BRL, COP and TRY is up 18% year to date, marking its strongest start to a year since 2005. The move highlights the continued appeal of yield differentials (interest-rate gaps between currencies), a classic macro trading driver in which investors borrow in a lower-yielding currency and buy higher-yielding ones to capture the spread. The source frames the performance as a reminder that traditional foreign-exchange strategies are still delivering strong returns even while crypto markets dominate headlines.