Real Stories: Currency Trading 101 with Rob Booker
Money Tree Investing
00:00
The Carry Trade
The carry trade is when you borrow a currency, pay little interest and then invest it elsewhere. It was popular in the 1990s with hedge funds who borrowed japanese yen to buy new zealand government bonds. When markets fell out of control during financial crisis, they couldn't get their money back. The real danger with carry trades is suddenly there's a bunch of loans that are due in JAPANESE YEN which gets more and more expensive to repay.
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