Rupee Carry Trade Gets A Boost From Government’s Corporate Tax Cut

Rupee Carry Trade Gets A Boost From Government's Corporate Tax Cut

Going long on the rupee with borrowed dollars offered the best returns in the past month in Asia

 

HIGHLIGHTS

  1. Government last week announced $20-billion corporate tax cut
  2. The move spurred $374 million of inflows into Indian stocks in three days
  3. Fears of global recession have dented risk appetite for emerging markets

The carry trade for the Indian rupee is getting boosted after a shock $20 billion tax cut by the government.

The corporate tax reduction announced on Friday has spurred $374 million of inflows into Indian stocks in three days, and supported the rupee. That’s adding to the attractiveness of the currency for carry-trade strategies, according to UBS Group AG and Kotak Securities Ltd.

With the world’s pile of negative debt almost doubling to $15 trillion this year, investors are increasingly employing currency-related strategies that allow them to squeeze more yields. Going long on the rupee with borrowed dollars offered the best returns in the past month in Asia