English to Russian Marketing Marketing

Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It's inherently attractive to be a buyer of a currency that pays a high interest rate while being short of a currency that has a low interest rate. Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged positions. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when US dollar is bought. An even more important factor is the relative value of the currencies, which changed 15% from low to high during the year 2005 - disregarding the interest rate differential. In our example, from a pure interest rate differential viewpoint, the User has an advantage of 100% per annum in his favour by being long US dollar and an initial disadvantage of the same size by being short.