World’s Worst Carry Trade Found in Brazil as 2016 Outlook Dims

Investors who bet on Brazil’s local bonds this year were saddled with the biggest losses among major economies. The outlook for 2016 isn’t much better.

Borrowing dollars at the end of 2014 and buying reais, a practice known as the carry trade, left investors with losses of 22 percent as Brazil’s currency posted the second-biggest slump in emerging markets amid political turmoil, the country’s worst recession in 25 years and two credit-rating cuts to junk. The loss was almost twice that for traders who bought Mexico’s peso and four times that of the Korean won.

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