Lea |
A strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate.
A trader using this strategy attempts to capture the difference between the rates, which can often be substantial, depending on the amount of leverage used.
The most recent carry trades that lasted ( were " carried " by traders/investors) for over a year were selling the Japanese yen against the US dollar and and buying Canadian dollar with US dollar. Because of the different Bank rates between those countries' currencies, the interest accumulated over time was substantial.
Thursday, 10th September 2009
Sources:
www.fxuniversity.org |
