I would recommend to Mr. El-Asmar that they introduce a product like DBV but with longer bond maturities, say 10 years. The carry trades implemented with longer maturities would be less sensitive to local interest rate movements. On the one hand, if New Zealand lowered their interest rates you'd probably lose a bit on the forex. But with a long duration, the local value of the bond would rise.
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Ray, as always I enjoy your posts on this topic.
Aug 13 10:14 am
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All Comments by Brian Shriver »Carrying the Dollar Upstream [View article]
I would recommend to Mr. El-Asmar that they introduce a product like DBV but with longer bond maturities, say 10 years. The carry trades implemented with longer maturities would be less sensitive to local interest rate movements. On the one hand, if New Zealand lowered their interest rates you'd probably lose a bit on the forex. But with a long duration, the local value of the bond would rise.
FWIW