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Forums › CIMA Forums › IRPT & Forward Rates
The CIMA text says:
IRPT implies that a money market hedge should give roughly the same result as a forward contract, as forward exchange rates are derived from spot rates and money market interest rates.
I am a little confused. How does the IRPT forecast of forward rates relate to the forward rates used in forward contract whereby either a discount or premium is added or subtracted from the prevailing spot rate?
See page 83 of our notes.
