interest rate differential (IRD)
The difference between the return achieved by depositing in one currency versus the money paid for borrowing in another. forex traders use the interest rate differential and the concept of interest parity to determine forward forex rates and to compute forex swaps. It also determines the amount that an investor using the Carry Trade can profit by if the exchange rate remains steady.
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interest rate differential (IRD)
indexed currency borrowings
forward discount
Dollar Carry Trade
forward exchange rate
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