How do hedge funds use the Japan Carry Trade? -

I ve heard that Hedge Funds are using the Japan Carry Trade to loan money at almost 0% interest, and invest the money. If you research the Japan Carry Trade, it usually mentions going to a Japanese Bank to borrow the money, but I would bet this is not how the Hedge funds borrow the money. Is there another way? If there a financial instrument in the U.S. that can be used to borrow money from the Japanese? I suspect that this is what they are doing, but I m curious as to how.

If you don t understand the quot;carry tradequot; any better than what your question would indicate...the you better keep your money in your pocket or under the matress. The way it works is... You BORROW money at a LOW INTEREST RATE... say ZERO PERCENT like the Japs had for years.. and then you take THAT money and CARRY IT to another country by whatever that means... and BUY currency in a coutnry that has HIGH INTEREST rates... borrow low... invest high... and as the interest rates go up.. .your investment grows. That s fine until you have a lot of money borrowed at zero percent and the country you bought currency has an interest rate that drops to zero... which is the case between JAPAN and the U.S.

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