Falken explains the mechanics of the Carry Trade. As usual, he is a very good teacher. Seems to me easy to explain why a high-interest currency appreciates: it is because liquid international capital pours into the same currency, increasing demand and causing its appreciation. The effect is dramatic in small countries like Israel, and that's why Fisher is maintaining the shekel's interest rate at a low level. It is also possible that I dont understand Falken's reasoning. I have before my eyes the exaple of Fishman (pic) who lost 500 million dollars when the Turks unexpectedly devaluated their lira.
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