yen carry trade

Definition

Forex

  • A forex strategy that takes advantage of low interest rates in Japan while earning interest on a currency with a higher yield such as the Australian Dollar. The Yen carry trade uses the Japanese Yen as the funding currency, since interest rates in Japan are at or near zero percent. The Australian Dollar, which earns 4.75 percent, could be bought against the Yen, netting the trader 4.65 percent.
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