Negative Carry Pair

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Dictionary Says

Definition of 'Negative Carry Pair'

A forex trading strategy in which a long position is held on a low-interest currency and a short position is held on a high-interest currency. A negative carry pair is the inverse of a positive carry. Because there is a cost with maintaining the long position until the expiration of the position, it is considered "negative". A negative carry implies that the futures price is higher than the current spot price of the underlying asset.

 
Investopedia Says

Investopedia explains 'Negative Carry Pair'

For countries with high short-term rates, the cost of the negative carry on a low-yielding reserve can be serious. For example, a long USD/EGP position when annual interest rates in Egypt are 8.5% and interest rates in the U.S. are 1% will cost 7.5% a year in carry. The investor can either abandon the option and forgo potential future returns created by interest rate volatility, or sell EGP and incur the cost of borrowing the currency at 8.5% and lending U.S. dollars at 1%.

Search results for

'Negative Carry Pair'

  • The US Dollar And The Yen: An Interesting Partnership

    http://www.investopedia.com/articles/forex/09/japanese-yen-us-treasury-bonds.asp
    ... supply and demand of dollars and yen as a measure of prices for this pair by the ...
    The positive carry trade is viewed by the market as a negative for Japan's ...

  • 8 Basic Forex Market Concepts

    http://www.investopedia.com/articles/forex/08/forex-concepts.asp
    ... that your account will never post a negative balance and ... (To learn more, read Currency
    Carry Trades Deliver ... the end of 2004, the AUD/USD currency pair offered a ...

  • Currency Moves Highlight Equity Opportunities

    http://www.investopedia.com/articles/forex/07/equities-currency.asp
    ... an 18% drop in first-half profits because of negative currency movements ... have seen
    between equities and currencies is the relationship between carry trades and ...

  • Forex: Finding Your Trading Style

    http://www.investopedia.com/articles/forex/06/TradeToTaste.asp
    ... After hundreds of trades, this negative skew in the risk ... while Japanese rates remained
    stationary at 0%, carry traders flocked to the pair, bidding it ...

  • Forex: Finding Your Trading Style

    http://www.investopedia.com/articles/forex/06/tradetotaste.asp
    ... After hundreds of trades, this negative skew in the risk ... while Japanese rates remained
    stationary at 0%, carry traders flocked to the pair, bidding it ...

  • Bond Spreads: A Leading Indicator For Forex

    http://www.investopedia.com/articles/forex/05/041305.asp
    ... frequently temporary imbalances between a currency pair that can ... It makes sense to
    unwind carry trades in times ... Key Strategies To Avoid Negative Bond Returns. ...

  • The 6 Most-Traded Currencies And Why They're So Popular

    http://www.investopedia.com/articles/forex/11/popular-currencies-and-why-theyre-traded.asp
    ... market, and adds liquidity to any currency pair it trades ... With the carry trade being
    such a large part of ... the franc tends to move in a negative correlation to ...

  • 5 Equity Derivatives And How They Work

    http://www.investopedia.com/articles/optioninvestor/10/equity-derivatives.asp
    ... market price of SSFs is based on the price of the underlying stock plus the carry
    cost of ... If the difference turns out to be negative, the buyer pays the seller ...

  • Forex Trading The Martingale Way

    http://www.investopedia.com/articles/forex/06/martingale.asp
    ... expectancy of using the martingale in roulette negative, and thus ... hits 1.255, you
    only need the currency pair to rally ... pairs in the direction of positive carry ...

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