Morgan Stanley, BofA See More in Best Carry Rally Since 2009

Investors selling the dollar to buy emerging-market currencies are off to a lucrative start in 2026, with strategists at top banks expecting such strategies to build further on last year’s 18% rally.

Carry trades — where funds purchase higher-yielding currencies using counterparts that are cheaper to borrow — are already up 1.3% this year, according to a Bloomberg index tracking returns across eight emerging markets. With President Donald Trump’s policies weighing heavily on the dollar, strategists at Morgan Stanley, Bank of America Corp. and Citigroup Inc. reckon last year’s returns, the biggest since 2009, will continue.