PPP IRP forward exchange contract

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November 26, 2015 at 8:27 am #285367
anjujoseph
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Sir what’s the difference between purchasing power parity, interest rate parity and forward exchange rate.
November 26, 2015 at 10:04 am #285412
John Moffat
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You must watch our free lectures which cover all of this – I cannot possibly type out all the lectures here.

The interest rate parity formula is what determines the forward rate.

The purchasing power parity formula is used for forecasting a future spot rate.
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