Carry Trade Calculator
Every major pair ranked by the gap between its two central bank policy rates, with the annual carry on a position of any size. Plus the part most carry pages leave out: why the gap is not free money.
By Joey van Diest, founder and editor Updated
Policy rates in the table
AUD
4.35%
Cash rate target
GBP
3.75%
Bank Rate
USD
3.63%
midpoint of 3.50 to 3.75
EUR
2.25%
Deposit facility rate
CAD
2.25%
Target for the overnight rate
Ranked by rate differential
| Long / short | Receive | Pay | Differential | Annual carry |
|---|
Positive rows earn the differential before costs; the same pair held the other way pays it. Rates as published by each central bank, most recently 2026-07-23.
The formula
differential = policy rate (base) − policy rate (quote)
annual carry ≈ position size × differential
Going long a pair means holding the base currency and borrowing the quote, so you earn the base country's interest and pay the quote country's. With AUD at 4.35% and CAD at 2.25%, the widest gap available among these five is AUD/EUR at 2.10%, which on a 100,000 position is roughly 2100 a year before any costs. Hold the same pair the other way and you pay that amount instead.
Why this is not free money
The immediate question is of course why everyone does not just borrow the lower-yielding currency and buy the higher yielding one (forever). The reason for this is that the forward exchange rate has already priced-in the differential. Under CIP, the forward-discounted value of the higher-yielding currency should offset its advantage on yields nearly perfectly otherwise a genuine arbitrage exists which would likely be eliminated immediately by banks. Therefore, carry is not "free" —it is a speculative bet that the high-yielding currency will fall less than the forward price suggests.
Historically the bet has paid off, thus why the carry trade is a recognized investment strategy and not an absurdity. It however pays to compensate the extremely bad characteristics of this risky asset class: long periods of low returns with occasional sharp drops in value when sentiment changes and everyone simultaneously attempts to unwind their positions. Interest is accrued linearly (over time); currency rates are not. A daily loss of 2% in currency can offset a full year's worth of 2% difference.
What your broker actually pays
One more gap between theory and your account: the differential above is between central bank policy rates, while your account is credited or debited a swap rate set by your broker from market forward points, with a markup. That markup is frequently large enough to turn a positive theoretical carry into a negative real one, and many brokers charge on both sides of the same pair. Check your broker's swap table against this differential before assuming income. For the rates themselves and their history see the central bank rates dashboard, for how the currencies are actually moving the strength meter, and before stacking several carry positions check the correlation matrix, since carry trades tend to be highly correlated and unwind together.
Frequently asked questions
- Will my broker actually pay me this?
- No, and this is the single most important thing to understand here. What you see is the difference between two central banks' policy rates. What your broker pays or charges overnight is its own swap rate, derived from market forward points and then marked up, often substantially. Retail swap is routinely worse than the raw differential on the side that should pay you, and worse again on the side that costs you. Treat this table as the underlying economics and your broker's swap schedule as the actual cash flow.
- If one currency pays 4.35% and another 2.25%, is that free money?
- No. Forward exchange rates already embed the interest differential, a relationship called covered interest parity: the higher-yielding currency trades at a forward discount that, in theory, exactly offsets the extra interest. If markets were perfectly efficient and currencies moved to forwards, carry would earn nothing. In practice high-yield currencies have historically not depreciated as much as forwards implied, so carry has earned a positive return over long periods. That return is compensation for risk, not an arbitrage.
- What is the risk, specifically?
- Carry trades tend to make small gains steadily and lose a great deal suddenly. The high-yielding currency is often the riskier economy, so in a risk-off shock investors unwind positions all at once and it falls sharply, wiping out years of accumulated interest in days. The pattern is common enough to have a name: the carry trade goes up by the stairs and down by the elevator. Any position sized on the assumption that carry income is steady is mis-sized.
- Why only these five currencies?
- Because we only publish a central bank rate where that bank's own data licensing permits redistribution. The Federal Reserve is public domain, and the ECB, Bank of England, Bank of Canada and Reserve Bank of Australia each grant reuse with attribution. Several other central banks publish under non-commercial or unclear terms, so they are left out rather than shown on a licence we cannot honour.
Method and limitations
Differentials are computed from the policy rates on our central bank page, each taken from that bank's own published data under terms permitting redistribution. Where a bank sets a target range rather than a single rate, the midpoint is used and labelled. These are policy rates, not the swap or rollover your broker credits, which is derived from market forward points and marked up, and is frequently materially worse. Carry is compensation for risk, not arbitrage: forward rates already embed the differential. Nothing here is a recommendation or a forecast.
Data sources
- Central bank policy rates (Fed, ECB, BoE, BoC, RBA) · each published by the bank itself; see that page for per-bank licensing
For general information and education only. This is not financial advice and not a recommendation to buy or sell anything. This tool is provided as is, with no warranty of accuracy: like any software it can contain errors, so always verify figures against your broker or the original source before acting on them. Trading and investing carry risk, including the risk of losing more than your initial outlay.
Spotted an error? Email [email protected] and it will be corrected. Maintained by Joey van Diest.