The carry trade old and new

The old version. Borrow in yen at low interest rates, convert in the spot market to dollars, buy dollar assets, and bet that the yen won't strengthen so much that the dollar profits are wiped out by FX losses. It worked fairly well, on average, from 1995 to 2006 or so, partly due to structural weakness in Japan.

The new version. Borrow in dollars at low interest rates, convert in the spot market to high yield currencies like the Rand or Real, buy assets in those currencies, and bet that the dollar won't strengthen so much the profits are wiped out by FX losses. It is working fairly well, on average, in 2007 due to structural weakness in the U.S., not least the newly found reluctance on the part of foreigners to buy U.S. securities.

What are you carrying today?