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Interest Rate Differential Calculator
Compare central bank interest rates and identify carry trade opportunities. See rate differentials across all major currencies.
Interest Rate Differential Formula
Rate Differential = Base Currency Rate − Quote Currency Rate
Example: AUD (4.35%) vs JPY (0.10%): differential = +4.25% — positive swap on AUD/JPY longs
Interest Rate Differential FAQ
1What is interest rate differential?
It's the difference between two countries' interest rates. A higher differential means a larger swap credit when buying the higher-yield currency.
2What is a carry trade?
A carry trade involves borrowing in a low-interest-rate currency and investing in a high-interest-rate currency to profit from the rate differential.
3How do interest rate changes affect forex prices?
When a central bank raises rates, its currency typically strengthens as higher yields attract foreign capital. Rate cuts have the opposite effect, weakening the currency as investors seek better returns elsewhere.
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Calculator results are estimates only — not financial advice. Trading involves significant risk of loss. Full risk disclosure.