Thread: The Carry Trade: Buy or Sell?

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Some banks in Europe give up to 5% on EUR and GBP. I couldn't find anything specifically on CHF however, and that's the one I am most curious about.

The idea was to get a gauge of interest differentials on EUR, CHF, GBP, USD and see how it can fit into FX trading in different locations.
Here it's a no go, because we "think" in EUR (i.e. EUR is a de-facto currency) and EUR yields a nice 5-7% interest even. USD yields at most 2% and CHF at most 4%.
CHF used to get better yields, but not any more for apparent reasons

Now the idea being, if you think in one currency and the interest rate on another is similar or (better yet) higher, you can save physical money in that currency and use the FX market to hedge the currency fluctuations.
One example is for US folks to buy buy CHF and long the USD/CHF if you can get a higher/equal interest on CHF.
For us in Europe it's better though: buy CHF, and LONG the EUR/CHF, which has a not so bad carry interest.

This might go better in the Carry Trade section, which is my favorite FX trading style

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