Interest rate parity (IRP) governs the relationship between interest rates and foreign exchange rates. It plays a key role in foreign exchange markets.

Interest rate parity says there is no opportunity for interest rate arbitrage for investors of two different countries. But this requires perfect substitutability and the free flow of capital.

A X-CCY Basis Index value near zero means that interest rate markets and FX markets are aligned in their expectations of forward FX prices. As of February 7, 2025, the X-CCY Basis Index was -0.49 ...

Dollar-euro exchange rate reaches parity The dollar has continued to strengthen against the euro, and for the first time in decades, the two currencies are worth about the same.

NEW YORK, Oct 27 (Reuters) - The euro dropped more than 1% on Thursday, falling back below parity with the dollar, after the European Central Bank (ECB) raised interest rates and U.S. data showed ...

We study the behavior of Covered Interest Parity (CIP) deviations – aka the CIP basis - in Emerging Markets (EM). A major challenge in computing the CIP basis in EM’s lies in measuring local currency ...