interest parity
noun[U]
FINANCEukus(alsointerest rate parity)thetheorythat thepossibleprofitfromexchangingcurrencyto that of acountrywith alowerinterestrate, theninvestingthemoneyin thatcountry, isequalto thepossibleprofitfrominvestingthemoneyin theoriginalcountry:
According tointerestparity,interestratearbitragecannotproducea risk-freereturn.