The Biggest Carry Trades

Maria Sovago | Special to
Mike Kemp | Mike Kemp | Getty Images

The Bank of Japan's plan to double the country's money supply over the next two years has put the spotlight back on the global carry trade.

Japan's lost decade served as the breeding ground for the development of "the mother of all carry trades" in the yen.

These trades are seen as "no-brainers": borrow money in a currency where interest rates are low and invest the money in a currency or a country where interest rates are higher.

But when these currency flows unwind they can create some spectacular blow-ups and investment losses, such as the collapse of the U.S. hedge fund Long-Term Capital Management.

We've identified some of the biggest carry trades based on either the interest rate differential or their popularity.

Click ahead to find out which currencies are popular as well as for some historical perspective on these trades.

By Maria Sovago
Posted May 22 2013