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Perfect carry trade hedge?

  • #1
  • First Post: Dec 17, 2014 9:16am Dec 17, 2014 9:16am
Dumb question... I'm living in Indonesia, my current interest rate is 7.75%, USD/IDR exchange rate (as I type) at Rp.12658. Suggest that I'm short USD/IDR at FX market with stoploss set at $100, and at the same time buying US$100 banknotes. Then my stoploss triggered, I will get swap from FX market and at the same time, my banknotes will appreciate in IDR value, correct? Anything I'm missed?
Any comment, especially positive one, will be very much appreciated.

Thanks
  • #2
  • Dec 17, 2014 11:12pm Dec 17, 2014 11:12pm
when u hit stoploss, u lose $100usd. yes. your banknotes will appreciate but can it cover the loss of $100usd.
  • #3
  • Edited 12:53am Dec 18, 2014 12:52am | Edited 12:53am
Quoting irfan.zee01
Dumb question... I'm living in Indonesia, my current interest rate is 7.75%, USD/IDR exchange rate (as I type) at Rp.12658. Suggest that I'm short USD/IDR at FX market with stoploss set at $100, and at the same time buying US$100 banknotes. Then my stoploss triggered, I will get swap from FX market and at the same time, my banknotes will appreciate in IDR value, correct? Anything I'm missed? Any comment, especially positive one, will be very much appreciated. Thanks
it only work if u use 1:1 leverage(with no profit) from my calculation, why buy banknote? it is 200-300 rupiah spread, just use BCA E-RATE... it just 30 rupiah spread
No Pain, No Gain
  • #4
  • Dec 18, 2014 3:31am Dec 18, 2014 3:31am
Quoting 2Good2beTrue
{quote} it only work if u use 1:1 leverage(with no profit) from my calculation, why buy banknote? it is 200-300 rupiah spread, just use BCA E-RATE... it just 30 rupiah spread
How to buy BCA E-RATE sir? Can you explain more about this?

Quoting Holypendant
when u hit stoploss, u lose $100usd. yes. your banknotes will appreciate but can it cover the loss of $100usd.
My banknote would be exactly Us$100*USD/IDR rate at that time right?
so according to my calculations, my stoploss would be worth US$100*Rp.12.658 = Rp. 1.265.800
and my banknote, if my stoploss hit, would be at US$100*(appreciated USD/IDR rate). now the problem is at what USD/IDR rate my stoploss hit. Any thought?
  • #5
  • Dec 18, 2014 3:52am Dec 18, 2014 3:52am
http://www.forexfactory.com/showthre...53#post7952553 post 275, i'll explain it in local language.
No Pain, No Gain
  • #6
  • Dec 18, 2014 3:57am Dec 18, 2014 3:57am
Quoting 2Good2beTrue
http://www.forexfactory.com/showthre...53#post7952553 post 275, i'll explain it in local language.
  • #7
  • Dec 19, 2014 1:07pm Dec 19, 2014 1:07pm
{quote} My banknote would be exactly Us$100*USD/IDR rate at that time right? so according to my calculations, my stoploss would be worth US$100*Rp.12.658 = Rp. 1.265.800 and my banknote, if my stoploss hit, would be at US$100*(appreciated USD/IDR rate). now the problem is at what USD/IDR rate my stoploss hit. Any thought?[/quote]

from what u you had said, means your leverage is 1:1. which means you will never hit stoploss. whatever you had lost in you trading account, you get it back in your bank notes value. in that case, why not just deposit in an Indonesian bank and get the 7.75%
  • #8
  • Last Post: Dec 19, 2014 1:21pm Dec 19, 2014 1:21pm
Quoting Holypendant
from what u you had said, means your leverage is 1:1. which means you will never hit stoploss. whatever you had lost in you trading account, you get it back in your bank notes value. in that case, why not just deposit in an Indonesian bank and get the 7.75%
I will never get that 7.75%, the biggest interest indonesian bank can give is 6%, that's why I'm looking for another possible way.
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