The 17-year-old centre-back, who represented England Under-18s in June against Russia, made his first start at the club’s Riverside Stadium during Saturday’s 1-0 win over Getafe.
And when asked about Fry’s performance, Karanka described him as "amazing” to MFC.co.uk.
"I knew him from last season, but this pre-season he’s showing everybody that he’s a very good player and is mature," said the Boro boss.
Fry has appeared several times for his hometown club throughout pre-season, and although Karanka is wary not to expect too much too young, he believes he has the right attitude to continue his rise.
"He’s 18 in August and needs to improve but he has everything to be a great footballer," the former Real Madrid defender added.
"He’s a very good kid. He likes to learn and train. He deserves to keep going in the same way and I’m going to give him the confidence."
Fry was a member of the Young Lions squad that lifted the European U17s Championship last summer before stepping up to the U18s level last campaign.
Having missed out on several squads earlier in 2015, the big defender won a recall for the double-header in Moscow at the beginning of June and won praise from manager Neil Dewsnip after starring in a 2-0 win.
"The back five were absolutely outstanding," Dewsnip told TheFA.com following the victory two months ago.
"The two centre-backs, Dael and [Tosin Adarabioyo], that is as good as I've seen them play and I'm very impressed."
Fry will be hoping to continue his progression up the international ranks when Aidy Boothroyd takes over the England U19s squad this season.