Carry Trade Funding May Shift to Yuan From Yen, BBVA Says

BBVA SA says the Chinese yuan could gain appeal for carry trades as an alternative to the yen if the Bank of Japan delivers further interest-rate hikes. The move would be FX-market driven rather than a fundamental China headline, implying potential incremental flows into CNH/CNY versus JPY. Net impact is likely moderate, depending on how BOJ pricing is repriced and where carry spreads settle.