1.Forex fundamental laws – Fisher equation
In the first two articles devoted to the Forex fundamental laws, I have explained the link between the foreign exchange market and the central banks’ interest rates, and between the currency market and the commodity prices. In the third, final, part, I will deal with the relation between the forex market and the inflation expectations, as well as the relationship between the interest rates and inflation.
Interest rate parity law explains the pricing of FX futures rates. Purchasing power parity law explains how a cash rate of a currency pair is made up. Inflation…
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