Spot, Forward, and Parity Markets

These pages explain the rate relationships and market conventions that connect spot FX, forward FX, and interest-rate differentials.

They belong near FX market structure even when the same math is used in valuation or macroeconomics.

In this section

• FX Parity Relationships
  FX market terms for covered interest parity and interest-rate parity relationships.
  • Covered Interest Parity
    Covered Interest Parity (CIP) is a fundamental concept in finance that explains the relationship between interest rates and exchange rates, ensuring the absence of arbitrage opportunities.
  • Interest Rate Parity
    Interest Rate Parity (IRP) is a fundamental theory in finance that explains how the difference in interest rates between two countries is connected to the expected change in their exchange rates. It is crucial for foreign exchange markets and international investors.
• Spot and Forward FX Markets
  FX market terms for spot rates, spot markets, forward markets, and non-deliverable forwards.
  • Forward Market
    A detailed overview of the forward market, including its definition, types, applications in foreign exchange, and practical examples.
  • Non-Deliverable Forward
    Comprehensive analysis of Non-Deliverable Forward (NDF) contracts, covering their meaning, structure, and the currencies commonly involved.
  • Spot Exchange Rate
    An in-depth exploration of the spot exchange rate, covering its definition, how it operates, and effective trading strategies.
  • Spot Market
    The Spot Market deals in commodities or foreign exchange for immediate delivery, typically within two business days for currencies and within seven days for commodities. Compare with forward dealing futures contracts.
  • Spot Rate
    Learn what a spot rate is, how it differs from a forward rate, and why the term matters in foreign exchange and other financial markets.