When the depreciation takes place, investors who used carry trades will notice that their return is zero. In other words, the investors’ return from investing in the high-interest-rate currency is...

When the depreciation takes place, investors who used carry trades will notice that their return is zero. In other words, the investors’ return from investing in the high-interest-rate currency is worth at least as much as the cost of borrowing in the low-interest- rate currency.