interest rate parity and PPP remember

pawn

does either of these hold in the short-run? swore a schweser question said one of them did, but can't remember

Windjam

IRP -- generally short term
PPP -- generally longer term

Analti_Calte

PPP works only long term, so base only long term currency market expectations using PPP.

Currency futures can be expected to incorporate IRP at any instance-- so while underlying rates will move slowly overtime, the IRP effects are observable instantly via futures. You could call this "IRP holds in the short term"



Edited 1 time(s). Last edit at Wednesday, June 1, 2011 at 08:46PM by jbaphna.

bboo

Interest rate parity

NO EXCUSES