IMF REPORT: $USD Funding "Carry Trade."

BLOOMBERG/
“There are indications that the U.S. dollar is now serving as the funding currency for carry trades,” the IMF said in a report published yesterday. “These trades may be contributing to upward pressure on the euro and some emerging-economy currencies.” While the dollar “has moved closer to medium-run equilibrium,” it is still “on the strong side.”
In the carry trade, investors borrow from countries with low interest rates to invest in higher-yielding assets. Benchmark interest rates of 0.1 percent in Japan and as low as zero in the U.S. compare with 7 percent in South Africa and 2.5 percent in New Zealand, making the yen and dollar favored targets for investors seeking to fund carry trades.

China Pushes Using Its Currency In Trade Deals.

China is stepping-up exclusive use of its currency in recent trade deals... replacing the USD.

For the $USD...this is an important...and disturbing development.