Disclaimer: Forex trading involves high risks, with the potential for substantial losses and is not suitable for all persons. The views expressed in this blogsite are those of the author(s) and do not necessarily reflect the official policy, position, or opinions of Global Forex Trading. Excerpt from: Forex Training
|  | | November 21, 2008 | | High yielding currencies on the FX market | One of the forex trading terms that you might have come across recently is "high yielders." This refers to currencies that have high interest rates attached to them.
Interest rates are set by central banks. The higher the rate, the higher the yield. High yielders are popular because they benefit from the carry trade. Low yielding currencies are used to fund their purchase.
During times of risk aversion, the risky process of borrowing to purchase a currency (and hoping to make money on the difference in interest rate) is shunned. However, when markets improve, traders feel more risk tolerance and high yielders are favored.
| Topic Tags: carry trade, currencies, forex trading, forex trading terms, FX market, high yielders, interest rates, trading terms | |
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