Interest rate parity
The rule by which the difference between two currencies' interest rates is built into the forward rate.
Formula
S is the current rate and F the rate for the term; r_q and r_b are the rates of the quote and base currencies, t the term in years.
How to read the number
It follows that the rate difference offers no risk-free gain: it has already been paid for in the price of the future rate.
When the metric lies
Also known as: covered interest parity