Yen carry trade example
The yen carry trade is a phenomenon that occurs when investors borrow yen at a low-interest rate then purchase foreign currency that pays a relatively high interest rate on its bonds. A yen carry trade example would involve borrowing yen and converting it into US dollars in order to profit from US Government bonds. The currency carry trade is an uncovered interest arbitrage. The term carry trade, without further modification, refers to currency carry trade: investors borrow low-yielding currencies and lend (invest in) high-yielding currencies. It is thought to correlate with global financial and exchange rate stability