Carry trade is a kind of speculation whose success is based upon a belief that there will be no adverse movement in exchange rates.

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This is because carry trade involves borrowing money in a currency with a low interest rate and investing that money in a currency with a high interest rate. The investor hopes to earn a profit from the interest rate differential, but if there is an adverse movement in exchange rates, the profit could be eroded or even wiped out. Therefore, carry trade success is highly dependent on stable exchange rate movements.

Carry Trade Is a Kind of Speculation Whose Success Is