interest rate parity
The situation when the difference in interest rates between two currencies is taken into account by shifting the forward forex swap for a currency pair. For instance, when the U.S. deposit rate is 1% and the Australian deposit rate is 4% for a given forward maturity date, then adjusting the forward rate for AUD/USD downward by 3% compared with the spot rate satisfies interest rate parity. Also called interest parity.
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