A common trading strategy is the currency carry trade — borrowing in the currency of a country with a low interest rate and using the funds to invest in the currency of another nation with a higher interest rate, then profiting from the difference. For example, one popular carry trade is borrowing funds in Japanese yen and investing it in the Australian dollar. A research paper, ‘ Commodity Trade and the Carry Trade: A Tale of Two Countries ,’ looks into the phenomenon that commodity exporters such as Australia and New Zealand, tend to have high interest rates compared to importers of basic goods such as Japan and Switzerland that also export finished products. Wharton finance professor Nikolai Roussanov recently spoke to Knowledge at Wharton about the findings of the paper, including why he thinks money managers who do both commodity and currency carry trades could be overloading on risk.…