by NavyGarlic December 21, 2019
Get the Flex Tape mug.Carry trade is an investment consisting of borrowing at a low interest rate to invest in an asset providing a higher rate of return, typically for less than a year.
Carry trades often involve borrowing in hard currency (such as dollars, euros, british pounds, or yen) to invest in high-risk, high-interest notes issued by third world countries.
As these investments are typically not sustainable for the issuing country, most such carry trades are cashed out (re-converted into dollars) within a year - during which net returns of 10% to 50% can often be earned.
Carry trades often involve borrowing in hard currency (such as dollars, euros, british pounds, or yen) to invest in high-risk, high-interest notes issued by third world countries.
As these investments are typically not sustainable for the issuing country, most such carry trades are cashed out (re-converted into dollars) within a year - during which net returns of 10% to 50% can often be earned.
A disastrous carry trade developed in Argentina during the Macri presidency (2015-19), as both local and foreign investors took advantage of notes with annual yields averaging over 80%. The trick was re-converting the notes into dollars before the inevitable devaluations, in which the investment could lose 20% in a day.
by ruckman December 24, 2019
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by TimeIsPreciousBabyGirl February 12, 2020
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by Harryiculus March 24, 2020
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