interest rate parity
noun[U]
FINANCEukus→interest parity
Examplesofinterest rate parity
interest rate parity
Two assumptions central tointerestrateparityare capital mobility and perfect substitutability of domestic and foreign assets.
From
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Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Their empirical analysis demonstrates that positive deviations from coveredinterestrateparityindeed compensate for liquidity and credit risk.
FromThis example is from Wikipedia and may be reused under a CC BY-SA license.
Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Uncoveredinterestrateparityhelps explain the determination of the spot exchange rate.
FromThis example is from Wikipedia and may be reused under a CC BY-SA license.
Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Given foreign exchange market equilibrium, theinterestrateparitycondition implies that the expected return on domestic assets will equal the exchange rate-adjusted expected return on foreign currency assets.
FromThis example is from Wikipedia and may be reused under a CC BY-SA license.
Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Using weekly data, they estimated transaction costs and evaluated their role in explaining deviations frominterestrateparityand found that most deviations could be explained by transaction costs.
FromThis example is from Wikipedia and may be reused under a CC BY-SA license.
Wikipedia
This example is from Wikipedia and may be reused under a CC BY-SA license.Do purchasing power parity and uncoveredinterestrateparityhold in the long run?
From theCambridge English Corpus
The choice between domestic and foreign bond holdings balances into an arbitrage condition pinning down expected exchange rate changes (i. e., an uncoveredinterestrateparitycondition).
From theCambridge English Corpus
Equation (5) is the uncoveredinterestrateparitycondition.
From theCambridge English Corpus
The resulting real exchange rate depreciation (as determined by the uncoveredinterestrateparitycondition) affects aggregate supply and so suitably offsets the aggregate supply shocks in both countries.
From theCambridge English Corpus
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