Carry Trade Calculator — Interest Rate Differential Profit
A currency carry trade borrows funds in a low-interest-rate currency and invests them in a high-interest-rate one, profiting from the rate differential. Enter your capital, both interest rates, leverage and holding period to see gross income, borrowing cost and net carry return.
% p.a.
% p.a.
days
Interest earned minus borrowing cost over the holding period
- 1
Leveraged position size
100,000 × 1 = 100,000 - 2
Gross interest income
100,000 × 5.5% × 1 = 5,500 - 3
Funding (borrowing) cost
100,000 × 0.5% × 1 = 500 - 4
Net carry profit
5,500 − 500 = 5,000
How does this calculator work?
Net carry = Principal × Leverage × (High rate − Low rate) × Days/365. If you deploy $100k at 10× leverage with a 5% rate spread for 365 days, you earn $50,000 net carry — but a small adverse currency move can eliminate that gain, so exchange-rate risk is the dominant consideration.
Formula
How this is calculated
A carry trade exploits the interest-rate differential between two currencies. The trader borrows in the funding currency (paying the low rate) and simultaneously invests the proceeds in the target currency (earning the high rate). The gross income is the full leveraged position multiplied by the high rate, scaled to the holding period; the funding cost is the same position multiplied by the low rate. The net carry is the difference — the profit if exchange rates stay flat.
Leverage amplifies both returns and risk. Without leverage (1×), the ROE equals the rate spread. With 10× leverage and a 5% spread, the theoretical ROE on capital is 50% — but a 1% adverse move in the exchange rate would erase the entire annual carry. Currency risk is the dominant source of loss in carry trades; this calculator captures only the interest component and assumes no exchange-rate movement.
This tool is for educational and planning purposes. Real carry trades incur transaction costs, bid-offer spreads, roll costs, and margin requirements that reduce the headline figures. Interest rates used are 2025 reference rates and are editable — update them to current rates for your chosen currency pair.
Frequently asked questions
Exchange-rate movements can wipe out the interest gain rapidly. Carry trades unwind suddenly in risk-off markets — the funding currency (often JPY or CHF) appreciates sharply, causing large mark-to-market losses on leveraged positions.
Historically, traders borrow in Japanese yen (low rates) and invest in Australian dollars, New Zealand dollars, or emerging-market currencies with higher rates. The specific pair and viability change with central bank policy.
Yes — leverage scales both the income and the borrowing cost by the same multiplier, so it also scales the net profit (and potential loss). The interest-rate spread as a percentage of the total position stays the same, but the return on the equity capital (ROE) rises with leverage.
Also known as
TG we-Calculate Editorial Team. (2026). Carry Trade Calculator — Interest Rate Differential Profit [Online calculator]. TG we-Calculate. https://we-calculate.com/calculator/carry-trade-calculator
TG we-Calculate Editorial Team. "Carry Trade Calculator — Interest Rate Differential Profit." TG we-Calculate. 2026. https://we-calculate.com/calculator/carry-trade-calculator.
TG we-Calculate Editorial Team, "Carry Trade Calculator — Interest Rate Differential Profit," TG we-Calculate, 2026. [Online]. Available: https://we-calculate.com/calculator/carry-trade-calculator
@misc{wecalculate_carry_trade_calculator, title = {Carry Trade Calculator — Interest Rate Differential Profit}, author = {{TG we-Calculate Editorial Team}}, howpublished = {\url{https://we-calculate.com/calculator/carry-trade-calculator}}, year = {2026}, note = {TG we-Calculate} }
Did this calculator help you?