The decrease in Dollar Fluctuation brings attractiveness to Arbitrage traders.

Gate News bot message, according to Bloomberg analysis, selling dollars to invest in emerging market currency coin is becoming more attractive as the volatility of the dollar relative to other traditional financing channels has decreased.

The 'sell America' trades driven by the U.S. fiscal situation and President Donald Trump's tariff policies are reducing the sensitivity of the U.S. dollar to risk events. The arbitrage trades of U.S. dollar funding against six emerging market coins and the S&P 500 index, which measures risk sentiment, have seen a significant decrease in their 90-day correlation. However, the correlation with the euro and the yen has reached its highest level in five years.

According to Bloomberg calculations, the return on arbitrage trades funded in USD, such as longing the Brazilian Real, Mexican Peso, Indian Rupee, Indonesian Rupiah, South African Rand, and Turkish Lira, is 8% this year. The returns on similar portfolios funded in JPY, EUR, and CHF are 2.6%, -3.3%, and -2.2% respectively.

Ryuji Securities' chief strategist Shoki Omori said: "For a long time, the US dollar has been used as a favored asset or reserve tool rather than a financing tool, but now the US dollar is showing many characteristics of viable low Fluctuation financing tools." He said that the sensitivity of emerging market arbitrage positions borrowing in US dollars to US dollar Fluctuation risk has decreased, thereby enhancing their overall risk-return attractiveness.