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Currency Carry Trade Scenario Calculator — result sheet
Estimate the base-currency result of borrowing one currency, investing the converted amount at another rate, and applying a future exchange rate.
Inputs used
Results
Visual chart
Breakdown
Calculation steps
Returned data table
Formula and methodology
Formula: Quote investment at maturity = N·S₀·(1+r_q)^T; base repayment = N·(1+r_b)^T; base-currency P/L = quote investment ÷ S₁ − base repayment; break-even S₁ = quote investment ÷ base repayment.
A carry trade attempts to benefit from a difference between borrowing and investment rates, but the exchange rate can dominate the result. This scenario keeps the quote convention visible: spot is quote-currency units per one base-currency unit, the investment is converted at the initial spot, and the maturity proceeds are converted back at the entered future spot. It shows the arithmetic risk rather than predicting a currency move.
This result follows the calculator's declared inputs, precision, validation boundaries, and model limits.
Input contract
- Borrowed amount in base currency — base currency; minimum 1.0E-6; maximum 1000000000000
- Initial spot quote — quote/base; minimum 1.0E-6; maximum 1000000
- Future spot quote — quote/base; minimum 1.0E-6; maximum 1000000
- Base borrowing rate — %/year; minimum -99.999; maximum 1000
- Quote investment rate — %/year; minimum -99.999; maximum 1000
- Holding period — years; minimum 1.0E-6; maximum 100
Worked example
| Input | Value |
|---|---|
| Borrowed amount in base currency | 100000 |
| Initial spot quote | 1.1 |
| Future spot quote | 1.1 |
| Base borrowing rate | 2 |
| Quote investment rate | 5 |
| Holding period | 1 |
The quote investment grows to 115,500 quote units, the base repayment is 102,000, and converting at 1.1 gives a projected 3,000 base-currency profit before costs.
Assumptions and limits
- The spot quote is quote currency per one base currency at both dates and is positive.
- Rates are annual nominal rates compounded annually for the stated period; fractional years are evaluated mathematically with the same power model.
- The borrowed amount is repaid in base currency at the base rate, while the converted proceeds earn the quote rate.
- Transaction costs, bid–ask spread, collateral, margin calls, funding access, taxes, defaults, rate changes, and interim cash flows are not modeled.
- A negative projected result or a future spot different from break-even is a scenario outcome, not a market forecast.
- This is educational arithmetic, not a trading recommendation or a guarantee of carry income.
Calculator note
Source and methodology
Use the official WorldCalculate methodology policy for the source, formula, precision, and boundary standards behind this calculator.
Planning estimate, not financial, medical, legal, or professional advice. © WorldCalculate — reuse with attribution. Built and curated by Hassan ALRowaie.
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