About the Currency Carry Trade Calculator
This tool estimates the annual carry from borrowing in one currency and investing in another at a different interest rate. It helps forex traders, investors, and students quickly see the net interest spread and the dollar income implied by a simple carry trade position.
How to use this calculator
- Enter the position size in U.S. dollars.
- Enter the annual investment interest rate for the high-yield currency.
- Enter the annual borrowing interest rate for the funding currency.
- Review the Annual Carry Income result.
- Compare the displayed investment rate, borrowing rate, and net interest spread.
How it works
The calculator uses three inputs: position size, investment interest rate, and borrowing interest rate. The investment rate is the annual rate earned on the currency being held, while the borrowing rate is the annual cost of funding the position.
First, it calculates the net interest rate spread by subtracting the borrowing rate from the investment rate. Then it multiplies the position size by that spread divided by 100 to estimate annual carry income.
The estimate assumes the position size is stated in U.S. dollars and that the rates apply evenly over a full year. It does not account for leverage, trading fees, taxes, rollover timing, or changes in exchange rates. Results are educational estimates and not financial advice.
Example calculation
If the position size is $100,000, the investment interest rate is 3.60%, and the borrowing interest rate is 1.00%, the net spread is 3.60% − 1.00% = 2.60%. The estimated annual carry income is $100,000 × 2.60 ÷ 100 = $2,600.00.
Frequently asked questions
What is carry income in forex?
Carry income is the interest difference earned from holding a higher-yielding currency while funding the trade with a lower-yielding currency.
Can the annual carry income be negative?
Yes. If the borrowing rate is higher than the investment rate, the net spread is negative and the trade has an estimated annual carry cost.
Does this calculator include exchange-rate changes?
No. It only estimates the interest-rate spread and carry income. Currency price movement can increase, reduce, or completely erase the carry return.
Does position size include leverage?
The calculator uses the notional position size you enter. It does not separately model margin, leverage, or broker financing terms.
Why can a carry trade be risky?
A currency move against the position can offset the interest income, and in volatile markets losses can exceed the expected annual carry.