The yen's recent surge is unlikely to derail popular carry trades across emerging markets, according to Morgan Stanley strategists. The strategy, which involves borrowing cheaply in a low-yielding currency and investing in higher-yielding assets, should withstand the yen's gains without triggering broader market volatility. A team led by James Lord, the bank's global head of foreign exchange and emerging markets strategy, noted that an additional catalyst raising broader volatility would be required to disrupt these trades.

The analysis suggests current market conditions support the resilience of carry trade strategies despite currency fluctuations.