Brazil Real Drops as Carry Loses Appeal Amid Strong U.S. Data

The real slipped as the U.S. economy advanced more than forecast, bolstering the dollar and dimming appetite for the world’s most-profitable carry trade.

In a carry trade, investors borrow money in a low-yielding currency to invest it in a country with higher yields. Brazil’s benchmark interest rate is 14.25 percent — more than 28 times the U.S. equivalent and the highest of any major currency. Borrowing dollars to lend in reais has returned 33 percent as investors lured by the difference in rates have turned the real into the world’s best-performing currency this year.

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