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The Advantages of Borrowing in Dollars
The carry trade is when investors borrow low yielding currency and use it to fund to lend to high yields currencies. Why did the foreign banks consider this to be a good place to lend? Well, they didn't have a lot of loan growth going on in those days. They thought that the only way these exchange rates can go is up. So both sides of the bargain thought they'd find this kind of this dream, dream scenario.