carry trade


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carry trade

n.
1. A financial transaction in which a currency or commodity is borrowed at a favorable interest rate and traded for a higher yielding asset.
2. The business of making such transactions.

carry trade

n
finance a speculative transaction in which a trader buys the currency of a country with a high rate of interest and sells the currency of a country with a low rate of interest
References in periodicals archive ?
2014: U1P, the carry trade and Minsky's financial instability hypothesis in the CEE and CIS.
History Says Emerging-Market Carry Trade Can Only End in Tears.
Galati, Heath and McGuire (2007) argued that risk reversals capture directional uncertainty about the exchange rate, and associate this with carry trade risks.
The yen carry trade is a common strategy in foreign exchange market employed by an investor who borrows yen in Japan at a low interest rate, selling the yen for dollar to invest in the U.
The dollar carry trade is the pool of cheap money that serves as the world's highly liquid source of funds for trading and investment.
By Nicholas Hastings/Dow Jones The carry trade, in which investors borrow the currencies of countries with low-yielding debt and invest in higher-yielding currencies, is changing and the dollar looks set to benefit.
Refusing to predict the performance outlook for the Exchange Fund in 2103, he said : "The unwinding of the yen carry trade may bring a new wave of capital flow to Asia and Hong Kong, but we have not seen this trend at the moment," "The investment environment for 2013 is very uncertain.
A resurgence of the carry trade - borrowing cheap yen to invest in other higher yielding assets - has also been a sore point around the region, but policymakers played down concerns about damaging and distorting impacts on asset prices and currencies.
As central banks around the world lower interest rates, the gap that carry trade investors are counting on between low-yielding and high-yielding currencies has narrowed, cutting in the profitability of carry trades.
In a series of papers, we have studied two widely-used currency strategies: carry trade and currency momentum.
For this reason, the Monetary Board continues to be vigilant that the SDA does not become the target of any carry trade.
dollar loans at offshore banking units of domestic banks, which are fund maneuvering center for many Taiwanese businesses, underscores the prevalence of carry trade.