Question On hedging Carry Trade with currency futures

Discussion in 'Forex' started by scalpmaster, Aug 12, 2007.

  1. If I long, say USD/JPY, for the interest differential
    in 100X leverage SPOT FX, can I hedge it exactly by
    shorting USD/JPY currency futures so I do not have
    to worry about exchange fluctuations?

    What's the catch/consideration??
  2. Daal


    the futures contract is fixed in size so you would need to calculate precisely the amounts. plus the interest rate differential should be more or less equal. whathever you make in one trade you will be 'paying' in the other. the interest carry is in built on the futures contract pricing
  3. BJL


    :D :cool: :D