The so-called offset interest rate parity refers to selling forward foreign exchange in the forward foreign exchange market and converting the local currency into foreign currency at the same time to lock in the future exchange rate. In this case, foreign currency converted from local currency can be converted back to local currency at a predetermined exchange rate after the arrival of foreign investment period. It can help to understand that the so-called throwing refers to the immediate conversion of local currency into foreign currency; The so-called compensation refers to the contract concluded by long-term repurchase of local currency.

Non-offset interest rate parity means that the local currency is converted into foreign currency at the spot without the need for the opposite transaction in the forward foreign exchange market. When the investment period ends, the foreign currency will be converted into local currency at the current exchange rate (called the future spot exchange rate). Even throwing it away won't help.

Correlation extension

Interest rate:

Interest rate refers to the ratio of the amount of interest to the amount of borrowed funds (principal) in a certain period. Interest rate is the main factor that determines the capital cost of enterprises, and it is also the decisive factor for enterprises to raise funds and invest. To study the financial environment, we must pay attention to the current situation and changing trend of interest rates.

Interest rate refers to the ratio of the interest amount due in each period to the par value of the borrowed, deposited or borrowed amount (called the total principal). The total interest of the lent or borrowed amount depends on the total principal, interest rate, compound interest frequency and the length of time of lending, deposit or borrowing.

Interest rate is the price that the borrower needs to pay for the money borrowed, and it is also the return that the lender gets by delaying his own consumption and lending it to the borrower. The interest rate is usually calculated by the percentage of one-year interest to the principal.

Refer to the above? Baidu encyclopedia-interest rate