Essential

Yield

The income return on an investment, typically expressed as an annual percentage based on cost or current value.

Definition

Yield is the income generated by an investment, expressed as a percentage. In forex, yield differences between currencies (interest rate differential) drive swap rates and can influence currency values. Higher-yielding currencies often attract capital.

How It Works

Bond yield: annual interest / bond price
Forex: interest rate differential between currencies
High yield currency: positive swap when long
Carry trade: borrow low yield, buy high yield

Trading Tips

Check swap rates before holding positions overnight

Yield differentials can support currency trends

Central bank rate decisions affect yields

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