Funding Currency

Dictionary Says

Definition of 'Funding Currency'


The currency being exchanged in a currency carry trade. A funding currency typically has a low interest rate. Investors borrow the funding currency and take short positions in currencies with higher interest rates.
Investopedia Says

Investopedia explains 'Funding Currency'


The Japanese yen has historically been popular as a funding currency among forex traders because of its low interest rate. For example, a trader will borrow Japanese yen and purchase a currency with a higher interest rate, such as the Swiss franc.
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