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Recall that a carry trade is to borrow in one currency, use those funds to buy another currency in the spot market, invest at interest
Recall that a carry trade is to borrow in one currency, use those funds to buy another currency in the spot market, invest at interest rates in that country, and then later sell your proceeds for the original currency. Suppose one-year US interest rates are 7.3% and Swiss rates are 5.5%. The current spot exchange rate is $1.0633/SF. If you begin by borrowing in SF, describe your trades and determine over what range of future spot exchange rates your Recall that a carry trade is to borrow in one currency, use those funds to buy another currency in the spot market, invest at interest rates in that country, and then later sell your proceeds for the original currency. Suppose one-year US interest rates are 7.3% and Swiss rates are 5.5%. The current spot exchange rate is $1.0633/SF. If you begin by borrowing in SF, describe your trades and determine over what range of future spot exchange rates your
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