Carry Trade Calculator

$
%/yr
%/yr
1 = no leverage. 10 = 10:1 leverage.
days
Finance

Calculate the profit or loss from a currency carry trade based on interest rate differential, position size, and holding period.

Formula

Net carry = position × leverage × rate differential × (days/365)
  • Carry trade: borrow in low-rate currency, invest in high-rate currency.
  • Profit comes from the interest rate differential.
  • Risk: exchange rate depreciation of the high-yield currency can exceed the carry profit.

$100,000 position, 5.4% differential, 1 year

Inputs
  • Position Size: 100000 $
  • High-Yield Currency Rate: 5.5 %/yr
  • Funding Currency Rate: 0.1 %/yr
  • Leverage: 1
  • Holding Period: 365 days

Rate diff = 5.4%. Return = $100,000 × 5.4% = $5,400 carry profit (before exchange rate risk).

Frequently asked questions

What is a carry trade?
Borrowing in a low-interest-rate currency and investing in a high-interest-rate currency to profit from the differential.
What currencies are used in carry trades?
Historically: borrow in JPY (low rate) or CHF, invest in AUD, NZD, or emerging market currencies (high rates).
What is the main risk?
Exchange rate risk — if the high-yield currency depreciates, it can wipe out the interest profit.
What causes carry trades to unwind?
Risk-off events (recession, market crises) cause rapid unwinding as investors flee to safe-haven low-rate currencies.