One of the most popular currency yen \"carry trade,\" investors are borrowing mo

Question

One of the most popular currency yen "carry trade," investors are borrowing money in are low, and are high such as Brazil- profiting from the difference. Investors can also execute a carry trade by borrowing the lower-yielding yen to contracts can be used to minimize the risk of yen carry trade? yen, where rates are low, and exchanging it for currencies in countries where rates in higher- yielding currencies, such as local-currency govenment debt in places like Brazil What kind of futures . short on Yen long on Yen long on Brazilian Real . futures contracts should not be used to hedge risk

Explanation / Answer

Answer : Long on Yen

Explanation : This is because being long on Yen, we can hedge our position towards loss due to rise in the value of Yen. If we hedge our position borrowing money in yen, then we will be safe if the Yen starts rising instead of going down.

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