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      • Interest rate parity is the fundamental equation that governs the relationship between interest rates and currency exchange rates. The basic premise of interest rate parity is that hedged returns from investing in different currencies should be the same, regardless of their interest rates.
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      Interest Rate Parity (IRP) Definition, Formula, and Example

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  3. www.investopedia.com › terms › iInterest Rate Parity (IRP) Definition, Formula, and Example

    Sep 5, 2021 · Interest rate parity is the fundamental equation that governs the relationship between interest rates and currency exchange rates. The basic premise of interest rate parity is...

  4. corporatefinanceinstitute.com › resourcesInterest Rate Parity (IRP) - Corporate Finance Institute

    The interest rate parity (IRP) is the relationship between the spot exchange rate and the expected spot rate or forward exchange rate of two currencies based on interest rates.

  5. www.thebalancemoney.com › what-is-interest-rateWhat Is Interest Rate Parity? - The Balance

    May 21, 2022 · Interest rate parity is a theory that suggests a strong relationship between interest rates and the movement of currency values. Learn how the two are intertwined.

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  7. www.wallstreetmojo.com › interest-rate-parityInterest Rate Parity - What Is It, Formula, Examples

    Apr 25, 2024 · What Is Interest Rate Parity? Interest Rate Parity is a concept that links the forex market rate and a country’s interest rates and states that if the currencies are in equilibrium, one cannot make use of the opportunity to make profits just by exchanging money.

  8. en.wikipedia.org › wiki › Interest_rate_parityInterest rate parity - Wikipedia

    Interest rate parity is a no-arbitrage condition representing an equilibrium state under which investors interest rates available on bank deposits in two countries. The fact that this condition does not always hold allows for potential opportunities to earn riskless profits from covered interest arbitrage .

  9. www.supermoney.com › encyclopedia › interest-rate-parityInterest Rate Parity (IRP): Definition, Formula, and ...

    Mar 21, 2024 · Interest rate parity (IRP) stands as a cornerstone theory, intricately weaving together interest rates, spot exchange rates, and foreign exchange rates. This comprehensive guide navigates the nuances of IRP, exploring its definition, formula, and real-world examples.

  10. biz.libretexts.org › Bookshelves › Finance5.1: Overview of Interest Rate Parity - Business LibreTexts

    Jan 30, 2023 · Interest rate parity refers to a condition of equality between the rates of return on comparable assets between two countries. The term is somewhat of a misnomer on the basis of how it is being described here, as it should really be called rate of return parity.

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