Excerpt from: GFT Analysts in the News
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| August 20, 2008 | | Carry trade back on in currency trading | The Japanese yen is struggling again in forex trading on the currency market as Chinese stocks make solid gains. Additionally, the news is that the Japanese interest rate is likely to remain steady at 0.5% for quite some time, and this is prompting some renewed interest in the carry trade in currency trading.
Japanese yen carry trade
In a carry trade, a low-yielding currency -- such as the yen -- is borrowed in order to fund the purchase of a high-yielding currency. Money is made on the difference between the interest rates. The larger the difference, the more that can be made.
Even though the carry trade is quite risky, it is one of the most popular trades on the FX market.
| Topic Tags: carry trade currency trading, currency trading, forex trading, FX market, Japanese interest rate, Japanese yen carry trade, Japanese yen forex trading | |
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