{"id":9764,"date":"2022-10-13T04:45:11","date_gmt":"2022-10-13T04:45:11","guid":{"rendered":"https:\/\/mdr.foobrdigital.com\/?p=9764"},"modified":"2022-10-13T04:45:11","modified_gmt":"2022-10-13T04:45:11","slug":"trade-interest-rate-differentials","status":"publish","type":"post","link":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/2022\/10\/13\/trade-interest-rate-differentials\/","title":{"rendered":"Trade Interest Rate Differentials"},"content":{"rendered":"\n<p>By selling currencies whose country has a lower interest rate against currencies whose country has a higher interest rate, you can profit from the\u00a0<strong>interest rate differential<\/strong>\u00a0(known as a\u00a0carry trade) as well as price appreciation.<\/p>\n\n\n\n<p>That\u2019s like being able to get a frosted cupcake with sprinkles on top! That talks to you! Imagine how delicious that would taste!<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/bpcdn.co\/images\/2016\/05\/grade15-cupcake.png\" alt=\"Interest Rate Differential Cupcake\" title=\"Interest Rate Differential Cupcake\"\/><\/figure>\n\n\n\n<p>Currency crosses offer many pairs with&nbsp;<strong>high interest rate differentials<\/strong>&nbsp;that are prime for these types of trades.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter\"><a href=\"https:\/\/bpcdn.co\/images\/2016\/05\/grade15-audjpy-crosses2.png\"><img decoding=\"async\" src=\"https:\/\/bpcdn.co\/images\/2016\/05\/grade15-audjpy-crosses.png\" alt=\"AUD\/JPY on a steady uptrend due to high interest rate differential\" title=\"AUD\/JPY on a steady uptrend due to high interest rate differential\"\/><\/a><\/figure>\n\n\n\n<p>For example, take a look at the nice uptrend on AUD\/JPY. If you had a long position on this pair, you would\u2019ve made a hefty profit.<\/p>\n\n\n\n<p>On top of that, the interest rate differential between AUD and JPY was huge.<\/p>\n\n\n\n<p>From 2002 to 2007, the\u00a0Reserve Bank of Australia\u00a0had raised rates to 6.25% while the BOJ kept their rates at\u00a0<strong>0%<\/strong>.<\/p>\n\n\n\n<p>That means you made profits off your long position AND the interest rate differential on that trade!<\/p>\n\n\n\n<p>Now that\u2019d be an awesome cash cow right there!<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter\"><img decoding=\"async\" src=\"https:\/\/bpcdn.co\/images\/2016\/05\/grade15-cash-cow.png\" alt=\"Interest Rate Differential Cash Cow\" title=\"Interest Rate Differential Cash Cow\"\/><\/figure>\n\n\n\n<p>Later on in college (if your brain hasn\u2019t exploded with all this forex knowledge by then), we\u2019ll teach you more about carry trade.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By selling currencies whose country has a lower interest rate against currencies whose country has a higher interest rate, you can profit from the\u00a0interest rate differential\u00a0(known as a\u00a0carry trade) as well as price appreciation. That\u2019s like being able to get a frosted cupcake with sprinkles on top! That talks to you! Imagine how delicious that [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[879],"tags":[],"_links":{"self":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9764"}],"collection":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/comments?post=9764"}],"version-history":[{"count":0,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/posts\/9764\/revisions"}],"wp:attachment":[{"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/media?parent=9764"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/categories?post=9764"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mudassirbackup.infinitycodestudio.com\/index.php\/wp-json\/wp\/v2\/tags?post=9764"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}