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Carry Trade

A Carry Trade is a strategy where an investor borrows in a currency with a low-interest rate and invests in a currency with a higher interest rate. The "carry" is the difference between the two currencies the trader or investor earns. A popular Carry Trade is to sell the Japanese yen, whose interest rate is close to zero and buy the U.S. dollar, where interest rates are much higher. The revenue from the difference between the two interest rates is earned over time.

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