Currency traders are starting to look at beaten down daily-interest bearing carry trades again.

Now the only problem with them in recent months was that their prices had gone way too high for their own good. However, now that some of them have wiped out a whole year's worth of gains, they are starting to look attractive again.

What's so appealing about these carry trades?

For one thing, they pay daily interest (unlike most dividend stocks that pay quarterly interest).

So literally every day (even on weekends) you're earning something by being a buyer of these carry trades.

I want to focus in on one economy that is the "king of the hill" when it comes to carry trades because it holds the title of the "largest interest earner among industrialized countries."

That country is New Zealand. It's not a huge economy, however it does have the wind to its back right now. How so? It's a huge commodity exporter. As you well know, commodities have been going through the roof lately. So New Zealand has been enjoying the ride.

This country exports things like dairy products (butter, cheese, etc.) and most recently, oil for instance. Well everyone knows what oil prices have been doing lately. That's great for an oil exporter.

New Zealand Oil and Gas' Tui project went into production in July 2007. The New Zealand Times reported the oil field has been increasing its production rate and is nearing its target production of 50,000 barrels a day, the company said.

Economists estimated that Tui will add 0.3 percent to third-quarter gross domestic product.

So this will obviously be a boost to New Zealand's economy.

Secondly, food inflation has gone up for the first time in over 30 years. This upturn (which I believe will be sustained for a long time) will benefit New Zealand's dairy exports.

As a huge added bonus right now, New Zealand's central banker stated that they have very little subprime exposure in their economy. This is more than most major economies can say right now.

Another benefit to the country is that some of their main customers are in Asia where economies have remained considerably stronger than the rest of the world. So New Zealand probably won't be pulled down as much by the U.S. economic slowdown as other countries will.

There are several other factors that are poised to help New Zealand's economy even further such as more government spending and personal tax cuts, according to their central banker.

Inflation remains high in New Zealand (which is good for a country's currency generally). This has been driven by the demand on New Zealand's resources that China and Australia's growing economies have had.

Also, The Reserve Bank of New Zealand's lending rate is a whopping 8.25 percent, and Alan Bollard, governor of the central bank has hinted in recent speeches that rates may need to remain high for quite some time to come. This would be good for the New Zealand dollar, also known as the Kiwi.

With their economy (GDP) growing a full percentage point in the third quarter, Bollard is justified by keeping rates high. So don't look for him to cut those nice rates anytime soon.

This will be great news for currency traders who like to collect daily interest on their position. You don't mind waiting for your currency to appreciate in value when you know you're gaining something literally daily while you wait.

The next interest rate decision for New Zealand will come about on April 24. So keep an eye out for the Bollard's speech.

Just last month, he said "future moves in interest rates could take quite some time as we wait and watch," possibly suggesting that rates would need to be high for a long time since the inflation rate is well above their "comfort zone".

This will especially help buyers of the NZD/JPY (New Zealand vs. Japanese yen) currency pair. New Zealand's interest rates are at 8.25 percent (which is what you'd be earning) and the yen is at 0.50 percent (which is what you'd be paying). So you'd get to keep the 7.75 percent difference.

Remember in currencies, there's leverage. So you can earn far more than this on your money because you can put down little, to control a lot. Plus this annual interest is collected on a daily basis.

Now that much of the sting has been taken out of the NZD/JPY pair (since it's fallen to yearly lows), it will become more attractive to investors shortly.