The cost of borrowing yen for three months stands at 0.91%—the second-lowest rate in the world, trailing only the Swiss franc.

At the other end of the spectrum lies the real, at 12.64%.
It is this spread that underpins the carry trade.

Investors borrow in Japan, invest in Brazil, and pocket a differential of nearly 12 percentage points—provided the exchange rate holds up.

This is the same dynamic we often highlight whenever the yen experiences significant volatility.

It is worth remembering what this implies.

A large portion of the capital flows currently supporting the real consists of borrowed money rather than structural positions.

Come one, come all—there are interest rate gains for everyone!