The interest rate theory (Rate Parity) believes that the difference between the interest rates of the two national interest rates is equal to the difference between the long -term exchange rate and the spot exchange rate.This article is LTG GoldRock to talk to you about the theory of interest rate parity ~
Interest rate parity theory advocates that as long as there is a gap between interest rates between the same period between the two countries, investors can use the settlement or arbitrage to earn the spread . The exchange rate between the currency between the two countries will beThe behavior fluctuates until the space of arbitrage disappears.Based on the theory of interest rates, the gap between interest rates between the two countries will affect the level of currency value of the two countries and the movement of funds, which will affect the difference between the long -term exchange rate and the time exchange rate .When the two maintain a balanced, the long -term exchange rate stickers or rising water should be equal to the interest rates of the two countries, otherwise there will be risk sets of exchange behavior to restore it to equilibrium to equilibrium to equilibrium to equilibriumstatus.This theory is proposed by Keynes and Ainzig.
The long -term exchange rate proposed by Keynes and Aijie determines the theory.They believe that a balanced exchange rate is formed by foreign exchange transactions caused by international replenishment arbitrage . .In the case of differences in interest rates between the two countries, funds will flow from low interest rates to high interest rate countries to seek profits.But when the arbitrage , when the yield of comparative financial asset , not only considers the yield provided by the two asset interest rates, but also considers the income changes caused by the exchange rate changes., That is the risk of foreign exchange .Observatory often combines arbitrage with the dropping business to avoid exchange rate risks and ensure no losses.As a result of a large number of rollover foreign exchange transactions is that the existing exchange rate of low interest rate national currency is down, and the exchange rate of the period of the exchange is floating;Exchange rates fall .The long -term difference is the difference between the exchange rate and the current exchange rate. As a result, the low interest rate national currency will have a long -term water increase , and the high interest rate national currency will have long -term water stickers.With the continuous progress of throwing arbitrage , the long -term difference will continue to increase until the yields provided by the two assets are exactly equal. At this time, the arbitrage activities will stop.The difference is exactly equal to the spread of the two countries , that is, the interest rate is established.Therefore, we can summarize the basic point of view of interest rate parity : The long -term difference is determined by the interest rate difference between the two countries, and the high interest rate national currency is in the future market .In the future marketing market, the water must be raised .
Theoretical defect
1. Interest rate parity No transaction cost .However, the cost of transaction is an important factor.If the cost of various transactions is too high, it will affect the arbitrage income, which will affect the relationship between the exchange rate and interest rate.If the transaction cost is considered, the international replenishment arbitrage will stop before the interest rate is parity.
2. In interest rates, it is said that there is no capital flow obstacles, and the funds can be smooth and unlimited to flow internationally.But in fact, the flow of funds will be hindered by factors such as foreign exchange control and foreign exchange market .At present, there is only a complete period of current exchange market in a few international financial centers , and there are few restrictions on the flow of funds.
3. In terms of interest rate parity, the scale of arbitrage funds is infinite, so the arbitrage can continue to replenish arbitrage until the interest rate is established.
