Covered Interest Parity
Living reference work entry
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DOI: https://doi.org/10.1057/978-1-349-95121-5_2924-1
Abstract
Covered Interest Parity describes an idealised situation in foreign exchange markets in which the interest rates on assets differing only in the currency of denomination will be equal. This article describes the theoretical assumptions under which CIP holds and the evidence for CIP in practice.
Keywords
CIP Counterparty risk Emerging markets Foreign exchangeJEL Classifications
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© The Author(s) 2010