According to ChainCatcher, as reported by Jinshi, carry trading is making a comeback among emerging market investors as the market bets that the Federal Reserve will begin cutting interest rates next month, weakening the dollar and boosting interest in high-yield currencies. Asset management firms, from Neuberger Berman to Aberdeen Group, are ramping up their positions in currencies of countries like Brazil, South Africa, and Egypt.

They believe that a weaker dollar and reduced volatility create a mature environment for this strategy. In this strategy, traders borrow lower-yielding currencies to buy higher-yielding ones. Earlier this year, such trades recorded double-digit returns, but were paused in July due to the dollar's rebound.

Recently, poor US employment data has reinforced market expectations that policymakers will have to cut interest rates next month to avoid an economic recession, driving up carry trading once again. From DoubleLine to UBS, many institutions have recently joined the bearish dollar camp, stating that the "bearish narrative on the dollar has returned."

Urquhart, co-head of emerging market debt at Lobo Mai, stated: "The possibility of a significant rebound in the dollar is very limited, and the overall performance of global economic growth remains robust." He prefers to engage in carry trades in South Africa, Turkey, Brazil, Colombia, Indonesia, and South Korea.