(Bloomberg) — When the recent spike in volatility starts to ease, watch for these unlikely candidates to emerge as potential carry-trade winners: the low-yielding South Korean won and Malaysian ringgit.

That’s according to a Bloomberg study of 10 emerging-market currencies looking at how current volatility compares with levels prevailing in the last period of super-low interest rates in 2012 and 2013. The analysis found fluctuations in the won and ringgit were closest to the lows from that time, meaning they offer a greater chance of dropping back even further and delivering more stable returns as carry-trade targets.

© Bloomberg
Lower Is Better

At the same time, a rush among central banks around the world to cut interest rates to combat the coronavirus has compressed the extra yields offered by countries such as Brazil, Indonesia and South Africa. This is reducing the allure of the more typical favorites for carry trades,