【学习笔记】International Finance 国际金融论研究 学习笔记-29

Part I

Basics ofInternational Finance --29

Ch6 --5

International Parity Relationships

Currency Carry Trade

1.     Currency carrytrade involves buying a currency that has a high rate of interest and fundingthe purchase by borrowing in a currency with low rates of interest, without anyhedging.

2.     The carry trade is profitable as long as the interestrate differential is greater than the appreciation of the funding currencyagainst the investment currency.

Currency Carry Trade (Example)