Empirical evidence has shown that it does not always hold and that it depends on the currency pair used. Also, it can hold over longer horizons but not over short ones. Carry trade A carry trade is a...

Empirical evidence has shown that it does not always hold and that it depends on the currency pair used. Also, it can hold over longer horizons but not over short ones. Carry trade A carry trade is a round-trip transaction whereby an investor buys a currency with a low interest rate and sells (exchanges) it for a currency with a high interest rate, thus profiting on the spread.