Understanding Risks in Carry Trade

In the context of currency trading, a carry trade involves borrowing funds in a currency with a low interest rate and investing them in a currency with a higher interest rate. An investor utilizing this strategy aims to profit from the difference between the interest rates, known as the 'carry,' as well as any potential appreciation of the currency they are investing in.

After observing market conditions, an investor identifies the Japanese Yen (JPY) as a low-interest currency and the Australian Dollar (AUD) as a high-interest currency. The current interest rate for JPY is 0.1% and for AUD is 2.5%. The investor decides to enter into a carry trade and borrows JPY to invest in AUD.

Considering this scenario, which of the following statements accurately describes a potential risk associated with this carry trade?