Good News About The Carry Trade

The NZ Herald carries a Reuters article suggesting that the carry trade is "rapidly phasing from the scene". The practice of borrowing in low interest countries such as Japan and investing in high interest economies such a New Zealand has contributed directly to the over valuation of the New Zealand dollar in the last three years. That in turn has placed great pressure on the export sector. If this article is correct, the recent rise of the New Zealand dollar as a result of the cuts in US interest rates and stronger than expected trade balance figures, may be short lived.