Government currency intervention boosts returns on emerging market carry trades.
The study looked at how different types of currency trading in emerging markets are affected by global exchange rate volatility. They found that during times of high volatility, trading in managed-float and fixed-rate currencies in emerging markets can give higher returns compared to free-floating currencies. This difference is due to government intervention in these markets, which adds value to the trading options available. This information can be useful for policymakers.