Aug 5 in General discussion
Have you heard of Carry Trade?
Another financial topic affecting the markets right now that not many people are discussing is Carry Trade.
Currently, the Japanese Yen has gone up about 5% compared to the US Dollar. This means that when people do a "carry trade" with the Yen, they borrow Yen to invest in currencies with higher interest rates like the Dollar. This is an arbitrage move. However, if the Yen's value increases, it can cost more to pay back the borrowed Yen, which can make the carry trade less profitable or even lead to losses.
So, in simple terms, a carry trade is like moving money from one place where you get fewer rewards (interest) to another where you get more, hoping to earn extra rewards along the way! However, if the trade backfires, you have to repay the loan with more expensive capital, which could lead institutions to sell other assets to cover the loss, potentially impacting the financial markets.
2
0 comments
Have you heard of Carry Trade?
skool.com/goosecrypto
Turn your crypto knowledge into income—earn while you learn. The perfect community for beginners to ballers to find the next golden goose in crypto.
powered by