An exchange of currencies, where an investor will exchange a specific amount of one currency for another currency which can be invested at a higher interest rate. The investor will then invest the new currency in a risk-free security, such as a bond, in hopes of earning more interest over time than could have been earned through investing the original currency. As long as the exchange rates stay the same, the investor will be earning money, but if the value of the original currency rose, the investor could lose money from this situation.
Related information about currency carry trade:
- Currency Carry Trade Definition | Investopedia
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 ...
- Currency Carry Trades 101
Sep 1, 2010 ... This strategy can provide returns even if the currency pair doesn't move a cent.
- Carry (investment) - Wikipedia, the free encyclopedia
The currency carry trade is an uncovered interest arbitrage. The term carry trade, without further modification, refers to currency carry trade: investors borrow ...
- The carry trade explained - FT.com
Jun 3, 2010 ... The dollar and sterling have weakened against a host of other currencies since the summer of 2009, promoting speculation that they could ...
- Why is the carry trade so dangerous? - MoneyWeek
Aug 24, 2007 ... In a currency carry trade, the speculator borrows money in a low-interest rate currency and buys higher-yielding assets in a different currency.
- Carry Trade Strategy Example
The carry trade is a popular trading strategy used in the FX market. It guarantees.. .
- Currency Carry Trade - Financial Dictionary - The Free Dictionary
A carry trade where you borrow and pay interest in order to buy something else that has higher interest. For currencies, it might be that you borrow in Yen (where ...
- 5 Carry Trades and Currency Crashes - NYU Stern School of ...
Our starting point is the currency carry trade, which consists of selling low interest rate currencies—“funding currencies”—and invest- ing in high interest rate ...