Go to fxstreet.com to explore exchange rates between US dollar and other major currencies (see Appendix A), and carefully describe how you would perform the currency carry trade. Pick the countries of your choice. You can pick any currency of your choice as long as it is in accordance with the principle of currency carry trade.

Clearly describe the carry trade including the indication of borrowing currency, lending currency (what re the reasons behind your choice) as well as the necessary steps needed to perform a carry trade.  

1. Find the least expensive spot exchange rate between two currencies which should prevail in 1 year from now for a trader to cover his expenses.  
2. Under what conditions will the trader make a profit? 

Answer rating: 100% (QA)

The carry trade is performed by borrowing in a currency with a low interest rate and lending in a cu... View the full answer