Carry Trade Calculator - FX Carry Return

A carry trade calculator estimates the profit or loss from borrowing in one currency, investing in another currency, and converting back later. Use it to test a currency carry idea before placing a trade, compare a rate spread with exchange-rate risk, review an old trade with realized prices, or document assumptions for a leveraged FX scenario.

• • Screen a currency pair: Enter the funding rate, investment rate, and exchange-rate view to see whether the interest spread is large enough to matter.
• • Review realized performance: Use entry and exit exchange rates to separate the interest carry from the currency gain or loss.
• • Set a break-even level: Use the break-even future rate to see how far the investment currency can weaken before the trade stops covering costs.
• • Estimate cost drag: Add spreads, commissions, or financing charges so the result is closer to the cash economics of the trade.

The carry trade calculator does not fetch live FX quotes or central-bank rates. That is intentional: carry trades are sensitive to the exact rate source, dealing spread, rollover convention, leverage, and timing. Enter the rates you can actually transact or the assumptions you want to test.

Use the carry trade calculator result as a scenario worksheet, not as a trading signal. A positive rate differential can be wiped out by a small exchange-rate move, and leveraged positions can be closed before the holding period if margin rules are breached.

If you need to translate a quoted spot rate into a cash amount before testing the trade, use the Currency Converter Calculator first.

The calculator converts the funding-currency amount into the investment currency, accrues both sides for the holding period, converts back, subtracts costs, and then annualizes the result.

• Borrow amount: The starting funding-currency amount. Net return divides profit by this amount.
• Entry and future FX rates: Both rates must use the same quote: funding currency per one unit of investment currency.
• Borrowing and investment rates: Annual rates used with simple day-count proration. The investment rate minus borrowing rate is the starting carry spread.
• Transaction costs: Round-trip spreads, commissions, rollover adjustments, or other costs entered in the funding currency.

Interest carry is shown separately from FX impact so you can see what is driving the result. If interest carry is positive but net profit is negative, the exchange-rate move or costs overwhelmed the yield pickup.

The annualized return is a simple prorated figure. It is useful for comparing holding periods, but it does not model daily compounding, reinvestment, funding resets, option hedges, tax, or forced liquidation.

According to Federal Reserve, the canonical carry trade involves borrowing in low-interest currencies and investing the proceeds in high-interest currencies.

To compare the carry setup with parity-implied exchange-rate logic, review the Interest Rate Parity Calculator alongside this return estimate.

Carry trade math is simple, but the interpretation depends on keeping the interest spread and exchange-rate exposure separate.

Carry trades are often discussed as yield strategies, but the exchange-rate line usually decides the outcome. A small rate spread over a short holding period can be smaller than a normal daily move in a volatile currency pair.

Interest parity is the theory behind why a rate spread should not be treated as risk-free money. The expected currency change can offset the interest differential, and the realized currency change can be much worse than expected.

When a forward quote is part of the setup, the Forward Premium Calculator helps separate forward premium or discount from the cash carry scenario.

Use one consistent quote convention throughout the calculator, then read the outputs from most mechanical to most decision-oriented.

1. 1 Enter the borrow amount: Use the amount in the funding currency before leverage. If you are testing a leveraged position, enter the actual borrowed exposure, not only your margin deposit.
2. 2 Enter exchange rates: Use funding currency per one unit of investment currency for both entry and future rates. Do not mix direct and inverse quotes.
3. 3 Add annual rates: Enter the funding cost and investment yield as annual percentages. Use the same rate basis for both when possible.
4. 4 Set the holding period: Enter calendar days. The calculator prorates interest by days divided by 365.
5. 5 Include costs: Add spreads, commissions, rollover adjustments, or financing charges in the funding currency.
6. 6 Read the break-even rate: Compare your future-rate assumption with the break-even rate before focusing on the headline net return.

Suppose a trader can borrow at 1.5% and invest at 5% for 180 days. If the investment currency weakens from 1.25 to 1.20, the calculator can show a loss even though the rate spread is positive. That tells the trader the FX view matters more than the yield pickup in that scenario.

If borrowed funding costs come from a broker loan rather than a currency deposit, estimate that cost with the Margin Interest Calculator before entering it here.

A compact carry worksheet is most useful when it prevents a rate-spread idea from hiding its exchange-rate and cost assumptions.

• • Separates carry from FX: You can see whether profit comes from the interest spread, the currency move, or both.
• • Shows the cost hurdle: Transaction costs are subtracted before return is calculated, which keeps small trades and short holding periods honest.
• • Creates a break-even level: The break-even future exchange rate gives you a concrete line for scenario planning and risk review.
• • Compares holding periods: Annualized return lets you compare a 30-day test with a one-year scenario without manually rebuilding the formula.
• • Documents assumptions: The input fields make it clear which rates, quote convention, and cost assumptions produced the result.

This carry trade calculator is especially helpful when comparing carry trades with ordinary investment returns. A high net profit may still be unattractive if it requires a large FX exposure or a narrow margin buffer.

The calculator is also useful after a trade closes. Enter realized rates and costs to explain whether the outcome came from yield, currency movement, or execution drag.

After a trade closes, the Holding Period Return Calculator can help compare the realized overall return with this calculator's carry and FX breakdown.

The output changes most when the exchange rate, rate differential, holding period, cost estimate, or leverage assumption changes.

• • The calculator uses simple prorated annual interest. It does not model daily compounding, changing rates, collateral yield, tax, or hedge accounting.
• • The future exchange rate is an assumption or realized input. The calculator does not forecast currencies and does not include live bid-ask spreads.
• • Leveraged trades can be closed before the planned holding period if losses reduce margin below broker requirements.

A carry trade is not a deposit comparison. It combines borrowing, investing, and currency exposure in one position. Treat the break-even future rate as a stress-test input and compare it with the normal volatility of the currency pair.

The result is before taxes. Tax treatment can differ for interest, FX gain or loss, derivatives, and financing expense, so the after-tax result can diverge from the calculator's pre-tax output.

According to International Monetary Fund, uncovered interest parity links the interest rate on one currency asset, the interest rate on a similar foreign-currency asset, and the expected change in the spot exchange rate.

According to Banque de France, an unhedged carry trade bets that exchange-rate changes will not offset the interest-rate differential over the holding period.

For an asset-price-only comparison that ignores interest carry, use the Capital Gains Yield Calculator to isolate appreciation or depreciation.