International Fisher Effect: Difference between revisions
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imported>Doug Williamson (Remove surplus link.) |
imported>Doug Williamson (Add link.) |
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* [[Four way equivalence model]] | * [[Four way equivalence model]] | ||
* [[Interest rate parity]] | * [[Interest rate parity]] | ||
* [[No arbitrage conditions]] | |||
* [[Purchasing power parity]] | * [[Purchasing power parity]] | ||
* [[Spot rate]] | * [[Spot rate]] | ||
Revision as of 15:40, 22 June 2021
This theory predicts that the spot foreign exchange rate will change over time to reflect and offset differences in interest rates in the respective currencies.
So for example, unhedged currency depreciation losses will on average negate and match exactly any gains on interest differentials between the two currencies.
