Definition of Negative Carry Pair

It is a Forex trading plan in which a lengthy place takes place on a low-interest Forex and a brief place takes place on a high-interest Forex.

A damaging carry pair is the inverse of a positive carry. Because there is a cost with maintaining the lengthy place until the expiration of the job, it is considered “negative”. A damaging carry implies that the futures cost is higher than the current spot cost of the underlying asset.
For countries with great short-term prices, the cost of the negative continues a low-yielding reserve can be serious. For example, a lengthy USD/EGP place when annual attention levels in Egypt are 8.5% and attention levels in the U.S. are 1% will surely cost 7.5% a year in carry. The investor can either abandon the option and forgo potential future returns created by rate of attention volatility, or sell EGP and incur the cost of borrowing the Forex at 8.5% and lending U.S. dollars at 1%. A Negative Carry indicates that the futures trading price is higher than the current spot price of the actual resource.

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