The existence of profits from the carry trade seems to negate the notion of uncovered interest parity (UIP), but:

Question

Quizplus · Accepted Answer

While the existence of profits from the carry trade may seem to contradict the theory of uncovered interest parity, it is believed that UIP occurs over longer periods, usually around two years. This is due to long and volatile movements in the exchange rate. Therefore, the profits from the carry trade may not necessarily contradict UIP, but rather represent short-term deviations from its long-term equilibrium.

The Existence of Profits from the Carry Trade Seems to Negate