Goldman Uses Euros to Fund Its Favorite Carry Trade: the Rupee.

Goldman Sachs is using the euro to fund its long rupee carry trade, betting that the European Central Bank will continue to reduce interest rates. The bank is particularly optimistic about the rupee compared to other high-yield Asian emerging market currencies. The euro has declined against the dollar this year due to interest rate cuts by the European Central Bank, while the Reserve Bank of India has focused on controlling inflation. The rupee is considered stable due to the central bank's interventions and large foreign-exchange reserves. Despite the recent elections in India, Goldman Sachs remains positive about the rupee's outlook. They also recommend buying Indian bonds, particularly the two-year paper. [Extracted from the article]