Meaning of “interest parity” in the English Dictionary


"interest parity" in Business English

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interest paritynoun [ U ]

uk us also interest rate parity FINANCE

the theory that the possible profit from exchanging currency to that of a country with a lower interest rate, then investing the money in that country, is equal to the possible profit from investing the money in the original country:

According to interest parity, interest rate arbitrage cannot produce a risk-free return.

(Definition of “interest parity” from the Cambridge Business English Dictionary © Cambridge University Press)