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

Glenn Stevens at Gain Capital — Glenn Stevens, Gain Capital

- Farah Khalique
- 04 Aug 2011

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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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