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Carry Trade

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Description

A strategy where one sells the currency of a country with a low interest rate and simultaneously buys the currency of a country with a higher interest rate. For example, yen crosses like GBP/JPY and NsD/JPY.

Carry trade leverages interest rate differentials by selling a currency with a low yield and buying one with a higher yield, aiming to profit from the interest rate spread. Currency pairs like GBP/JPY are commonly used due to their significant rate differences.

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