Carry Trade Calculator
Estimate the return from borrowing in one currency and investing in another when interest rates and exchange rates move. This page also keeps the formula, examples, FAQs, and references close by so you can check the result with confidence.
What This Carry Trade Calculator Helps You Do
With $1,000 invested, a 0.75% borrowing rate, a 0.5% lending rate, and a 180-day hold, the sample profit is about $1.22. Review the formula and examples below if you want to see how the result is derived.
This page is meant to give you a fast answer, but it also helps you double-check the math before you make a decision. Start with the inputs that you already know, run the calculation, and then compare the output with the formula, examples, and FAQs below so you can see whether the answer fits the situation you are modeling.
If the result looks off, the usual causes are a unit mismatch, a missing decimal, the wrong scenario, or a value that needs to be entered as a rate instead of a total. The notes on this page are designed to make those checks easy without forcing you to leave the calculator and search for context elsewhere.
- Use the calculator first for a quick estimate.
- Use the formula to understand how the result is built.
- Use the examples to compare common use cases.
- Use the references when the answer depends on a standard or assumption.
Common Checks
A quick result is useful, but the best result is one that still makes sense when you look at it a second time. If you are comparing scenarios, try changing one input at a time so you can see which variable has the biggest impact on the final answer. That makes it much easier to spot whether the calculation matches your expectations.
It also helps to keep the context of the problem in mind. A calculator can tell you the math, but you still need to decide whether the input represents a total, a rate, an average, or a category-specific assumption. When in doubt, start with a simple example from the page and scale up from there.
- Check that every unit matches the rest of the problem.
- Keep rates, totals, and averages separate.
- Adjust one variable at a time when testing scenarios.
- Use the smallest realistic input first, then scale upward.
Scenario Planning
This calculator is especially useful when you want a quick answer before you commit time, money, or effort. Try one baseline input set, then change a single number and compare the result so you can see how sensitive the answer is to that variable.
That makes the page useful for more than just arithmetic. It becomes a small decision aid that helps you compare options, test assumptions, and explain the final number with confidence when you need to share it with someone else.
Result
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How to Calculate Carry Trade Calculator
- Enter the investment amount: Set the capital base for the carry trade.
- Set the rates and exchange values: Use the borrowing rate, lending rate, and exchange rates at entry and settlement.
- Review estimated profit: The calculator combines the interest spread and FX movement across the holding period.
Carry Trade Calculator Formula
| Variable | Meaning | Unit |
|---|---|---|
| Amount invested | Capital allocated to the trade | $ |
| Borrowing rate | Rate paid on the borrowed currency | % |
| Lending rate | Rate earned on the invested currency | % |
| Exchange rate change | Difference between initial and settlement exchange rates | |
| Holding days | Length of time the position is open | days |
Worked Examples
- Amount invested: $1,000
- Borrowing rate: 0.75%
- Lending rate: 0.5%
- Initial exchange rate: 0.85
- Settlement exchange rate: 0.83
- Holding period: 180 days
Result: $1.22
A small spread and modest currency movement produce a small gain.
- Amount invested: $5,000
- Borrowing rate: 3.5%
- Lending rate: 1.2%
- Initial exchange rate: 1.10
- Settlement exchange rate: 1.08
- Holding period: 365 days
Result: $114.50
The larger spread and longer period increase the expected return.
- Amount invested: $2,500
- Borrowing rate: 2.0%
- Lending rate: 0.75%
- Initial exchange rate: 0.92
- Settlement exchange rate: 0.96
- Holding period: 90 days
Result: $8.11
Shorter holding periods leave less time for the rate spread to compound.
How to Interpret Your Results
| Range | Meaning | Action |
|---|---|---|
| Low profit | The spread is small or the trade is short | Compare the expected return against transaction costs. |
| Moderate profit | The carry trade has a visible edge | Watch for currency risk and financing costs. |
| High profit | The modeled spread is favorable | Double-check whether the FX assumption is realistic. |
Frequently Asked Questions
References
Last reviewed: March 2026