Carry trade
Plain definition. A carry trade means borrowing in a currency with low interest rates and putting the money into a currency with higher interest rates, usually using borrowed money.
Technical definition. A 2007 Federal Reserve Board discussion paper notes that no generally accepted definition of a carry trade exists, and takes a middle ground: long positions in high-interest-rate currencies held simultaneously with short positions in low-interest-rate currencies. The paper describes two channels. The “canonical carry trade” borrows in low-interest currencies and invests the proceeds in high-interest currencies, and the “derivatives carry trade” takes leveraged positions through currency futures and forward contracts. The realized profit from either channel is identical. Under this definition carry trades are leveraged, so adverse price movements draw down the collateral pledged to the lender or counterparty.
On this site
On this site, Carry trade comes up in What is a hedged XRP carry trade, and is anyone running one? and Can the same XRP be held, hedged and put to work at once?.
Source
FRB: What Can the Data Tell Us about Carry Trades in Japanese Yen? (federalreserve.gov), read October 1, 2026.