Carry trade refers to a kind of market speculation that buys high-interest currencies in the foreign exchange market, sells low-interest currencies, deposits the bought high-interest currencies in domestic banks, and earns higher interest than countries with low-interest currencies. Carry trade begins with converting low-interest currency into high-interest currency, ends with depositing high-interest currency in banks and financial institutions in the country, and ends with converting high-interest currency into low-interest currency again.

Examples are as follows:

The USD/JPY is at 1 15. 00, you buy 1 USD and pay 1 15 at the same time. 00 yen, and deposit 1 USD into American banking institutions. A year later, the exchange rate of the US dollar against the Japanese yen rose to 125. 00。 At this time, you will end the arbitrage trading.

If the interest rate in the United States is 5% and the interest rate in Japan is 0, then 1*5%=0.05. Then there will be $65438 +0.05. 1 USD can now be converted into 125.00 yen, and 0.05 USD can be converted into (0.05 *125.00 = 6.2500) 6.2500 yen. * * * There is 13 1.25 yen, which is the same as the previous115.00 (131.25-1.