Fund managers are diversifying their funding currencies beyond the US dollar to invest in emerging markets, according to reports from July 5, 2026.
Colombia and Brazil have seen their currencies appreciate at least 5% this year. High real interest rates in these countries continue to attract carry trade operations.
Managers such as Christian DiClementi of AllianceBernstein and Invesco are using the euro, Canadian dollar and yen to fund positions. Morgan Stanley and Citigroup have issued similar recommendations to clients.
The dollar strengthened after Kevin Warsh arrived as Federal Reserve chair. An HSBC survey of 101 institutions with $432 billion in assets showed a stronger dollar is now the top concern.
Bill Campbell of DoubleLine Capital said diversifying funding helps manage volatility, though there is still no clarity on the Federal Reserve's next moves.
