The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Covered Interest Parity

  • C. Emre Alper
  • Oya Pinar Ardic
Reference work entry


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.


CIP Counterparty risk Emerging markets Foreign exchange 

JEL Classifications

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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • C. Emre Alper
    • 1
  • Oya Pinar Ardic
    • 1
  1. 1.