Understand that as a currency appreciates, there is pressure to cover debts in that currency (by converting other assets into that currency); this affects the (borrowing) costs and can cause a carry...

Understand that as a currency appreciates, there is pressure to cover debts in that currency (by converting other assets into that currency); this affects the (borrowing) costs and can cause a carry trade to turn negative. Box 16.1 highlights some episodes of failed carry trades.