Japan’s new leverage limit will hurt carry trade, says Glenn Stevens

Glenn Stevens at Gain Capital
Glenn Stevens, Gain Capital

The popularity of the carry trade among retail investors looks set to take a hit after Japan's Financial Services Agency (FSA) cut the leverage limit for retail traders from 50:1 to 25:1 on August 1, according to Glenn Stevens, chief executive of Gain Capital in New Jersey.

Carry traders typically sell low interest rate currencies and use the funds to purchase a different currency yielding a higher interest rate, turning a profit as long as the exchange rate remains stable. Retail traders using

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