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What is a carry trade?
A carry trade involves borrowing in a country with a low interest rate and investing in higher yielding assets elsewhere in the world.
Carry trade and FII flows:
Carry trades resulted in money flowing to emerging markets such as India
FII outflows tend to happen when such trades are reversed
Barclays Capital Carry Unwind Risk index tracks the risk of such reversal
The index indicates that the risk of such a reversal has been on a declining trend in recent times
