Carry trade

Carry trade
It is a trading plan where the traders or the investors borrow or sell assets like currencies with low interest rate to purchase high yielding possessions. In the overseas exchange, the interest is credited from the account of the trader regularly on certain positions. The most famous Carry trade has been selling Yen and purchasing high yielding money like New Zealand Dollar, British Pound and Australian Dollar. For instance, if you purchase the JPY/ AUD, you sell Yen and purchase an equal amount of the Australian Dollars. As far as one holds the position you would have to pay nearly 0.50% interestsin a year.