Carry trades
- Taking Advantage of Interest Rate DifferentialsCarry trade consists on borrowing one currency that has a low interest rate in order to purchase another with a higher interest rate, taking advantage of the interest rate differential. This strategy can be highly profitable, especially if high leverage is used.
An example of Carry Trade is borrowing Japanese Yen (usually a low-yielding currency) to invest on Australian Dollars (a high-yielder)
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