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 ...

Interest rate parity is the fundamental equation that governs the relationship between interest rates and currency exchange rates for different countries. It is a theory in which the interest rate ...

The Fed is set to hold interest rates steady, but with inflation rising amid a slowing economy, it could lower its forecast ...

Uncovered interest parity (UIP) has been almost universally rejected in studies of exchange rate movements. In contrast to previous studies, which have used shorthorizon data, we test UIP using ...

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Hitting parity is psychologically significant for ... They do take exchange rate movements into account when they set interest rates, but direct intervention to support the euro is extremely ...

According to Jefferies, the euro has reached a bottom “for now” and will only go higher from here this year. “The mood on [the] euro coming into 2025 was so sour, with most expecting a break of parity ...

Using equation (2), the coefficient should equal one if forecasts are based on the uncovered interest rate parity intuition. In the data, we find that the interest rate difference alone explains a ...