Interest rate arbitrage

Japanese: 金利裁定 - きんりさいてい

When there is an interest rate differential between financial markets, this is a transaction in which profits are made by raising funds in a low-interest market and investing them in a high-interest market. It is also called interest arbitrage. In addition to the once popular foreign exchange market transaction that took advantage of the spread between the interest rate differential between two countries and the spread between spot and forward exchange rates (spot and forward spread), recently, following financial liberalization, it has also been conducted between short-term financial markets within a country and between spot and forward bond markets. → Arbitrage Transactions/Foreign Exchange Arbitration

Source : Heibonsha Encyclopedia About MyPedia Information

Japanese:

金融市場間に金利差が存在するときに，低金利の市場で資金を調達して高金利の市場でその資金を運用し利益を稼ぐ取引のこと。利子裁定ともいう。この取引には，かつてさかんであった外国為替市場における２国間の金利差と直物(じきもの)・先物為替相場の乖離率（直先スプレット）との開きを利用したもののほかに，最近では金融自由化などに伴って，一国内の短期金融市場相互間，債券の現物・先物市場間などでも行われている。→裁定取引／為替裁定

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