A Negative Carry Pair is a trading strategy used on the forex markets in which a trader or investor holds a long position on the currency of a country with low interest rates and also shorts the currency of a country with high interest rates. This trading strategy initially incurs a loss because of the payment out for the short position will be more than what is gained for the long position. When a trader is willing to create a negative carry pair it normally means that the trader is confident that the currency with the lower interest rate will experience some very strong positive economic activity.
What is Negative Carry Pair?
A Negative Carry Pair is when a trader holds a long position on a currency with low interest rates and shorts a currency with high interest rates.